The Coast Pays, Delhi Collects: What The Centre's Mineral Bill Takes From States

On August 12, the Lok Sabha passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026. There was no debate. What the House voted upon was the reversal of a judgment nine judges of the Supreme Court had spent thirteen years arriving at, and the extinction of a taxing power that belongs, under our Constitution, to the states.

Let me be fair to the Government, for its case is not frivolous. In July 2024, in Mineral Area Development Authority v. Steel Authority of India, a nine-judge Bench held by eight to one that royalty is not a tax but a contractual payment, and that the states retain their own power to tax mineral rights and mineral-bearing land. Correcting an error of 1989, it allowed demands back to 2005, payable from this April, leaving mineral states with claims worth thousands of crores and industry with matching liabilities. That deserved an answer.

But this Bill raises more questions than it has tried to answer.

Let's begin with where the matter was first settled: the Constituent Assembly itself. In December 1948, Professor KT Shah asked the Constituent Assembly to declare all natural wealth - our land, our minerals, the seas around our coasts - to be public property, held privately by no one and worked by public enterprise alone. The Assembly declined. Our Constitution vests the ownership of minerals in nobody but the owner of the land, and land is Entry 18 of the State List. Where the framers wanted the Union to own a resource, as with the seabed in Article 297, they said so.

What they wrote instead was a division of powers, chosen with care. On taxation, they placed two entries side by side. Entry 50, taxes on mineral rights, is subject to any limitations Parliament may impose by a law relating to mineral development. Entry 49, taxes on lands and buildings, is subject to nothing at all. Men who had just written an override clause did not forget how to write a second. The omission was a decision, and it is the decision on which the Court turned in 2024.

This Bill restricts both. On mineral rights, the Government is within its rights. On mineral-bearing land, it does what the framers declined to permit, by declaring land a subject of mineral regulation. That provision will very probably fall in court, handing the industry the very uncertainty the Bill was meant to end. Two further defects: any state levy uncollected before commencement is deemed invalid at all material times, while whatever has been collected need not be refunded. So the company that paid has lost its money, the company that did not owes nothing. And the Bill fixes no limit itself, leaving the Central Government to decide by rules what a state may levy. A constitutional entitlement has become a licence issued from New Delhi.

Who pays? Jharkhand, Odisha, Chhattisgarh, West Bengal, Bihar, Uttar Pradesh, Rajasthan, Andhra Pradesh, Telangana, Karnataka, and Madhya Pradesh had all either legislated such levies or stood to gain from the judgment. Arrears since 2005 are cancelled by a single clause. Nor is this a quarrel between Union and Opposition: Odisha, Chhattisgarh, Madhya Pradesh and Rajasthan are governed by the party that governs at the Centre, and lose as much as Jharkhand or Karnataka. Which is why the Bill went to no committee, where members from those states would have had to say aloud what it costs them.

Now coming to my home state. Kerala (soon to become Keralam) has not, so far as I am aware, levied a tax of this kind, and I make no claim of any arrears due to it. What Keralam loses, though, is the only fiscal instrument it ever had over the vital resources under its soil. Heavy mineral sand and china clay are more than ninety per cent of the value of our mineral production. Our mineral economy is not a mine in a forest. It is our coastline. At Chavara in Kollam lies one of the world's finest ilmenite deposits. What does Keralam earn from it? A royalty rate fixed in Delhi that it may not revise, half of the mineral blocks worked by a central undertaking, and Union control under the Atomic Energy Act over monazite, the most valuable constituent of all.

Set that beside what is happening in the water. On March 4, 2025, our Assembly unanimously asked the Centre to withdraw the 2023 amendment to the Offshore Areas Mineral (Development and Regulation) Act, alarmed at the auction of blocks off the Kollam coast. The auction proceeded, and the royalty accrues to the Union. So: seaward of the shoreline and the seabed is the Union's, and the revenue flows to Delhi; landward, mineral-bearing land is now taken out of the State's fiscal reach.

In my own constituency, the Department of Mining and Geology has delineated heavy mineral areas along the Veli-Kazhakuttom and Vizhinjam-Kovalam stretches. Nothing is mined there today, but the Union Budget proposes rare earth corridors in Keralam. Who lives there? Poor fisherfolk. Pallithura, Valiyathura, Poonthura, Beemapally, Vizhinjam, and Adimalathura are among the most densely settled fishing coasts in India, losing land to erosion every monsoon, already living with the repercussions of a major port development. Sixty kilometres north, Alappad has spent twenty years showing what beach sand mining does to a community living on it.

These are not people with a bargaining position. They have no lobby in Delhi and no seat at any table. What they have is the vote, which they exercise to send representatives to the House on the understanding that we will speak for them when it matters. On this Bill, we were given no opportunity. No member was permitted a question, no clause examined, no amendment moved. It goes without saying that nobody consulted the fishermen.

None of this is yet beyond repair. The Act commences on a date the Government decides, and the rules are yet to be written. I urge the Government to confine the restriction to mineral rights and drop the extension to land. Put the limit in the statute rather than in executive rules, as a ceiling against royalty, so industry knows its exposure and the states keep predictable headroom. Reconsider the retrospective clause, consult the states before framing any rule, and classify no coastal parcel as mineral-bearing land without the affected local self-governments and the coastal community being heard, as is their right.

In the same week that Parliament granted Keralam its name, it took from Keralam a measure of authority over Keralam's own shore. Federalism is not a slogan, nor the property of the Opposition. It is the arrangement by which a country of this size holds together, and it survives only so long as its terms are altered by agreement and not by arithmetic. The Constituent Assembly took the better part of a week over these entries. Nine judges spent years on them. Our House disposed of the matter in minutes. Whatever one concludes about the merits, that ratio ought to trouble us all.

(The author is Member of Parliament for Thiruvananthapuram)

Disclaimer: These are the personal opinions of the author