India’s Mining Laws: Key Considerations for Foreign Investors

India offers vast opportunities for mineral exploration and extraction, with its rich geology and accelerating reforms making it an attractive destination to start mining business in India. For Russian investors—already familiar with large-scale mining and heavy industry—India presents a compelling new frontier. To successfully enter this market, it's essential to navigate the country's multifaceted legal frameworks, licensing processes, and compliance mechanisms. Here’s a detailed guide to what you need to know.

1. Why India Is an Attractive Mining Destination

• Resource abundance: India is a leading producer of iron ore, bauxite, coal, manganese, and a growing player in critical mineral exploration (e.g., lithium, cobalt, nickel).
• Government reform: Recent measures like online mineral block auctions, relaxed exploration norms, and revamped revenue-sharing models have improved transparency and investor access.
• Digitalization of approvals: The Indian Bureau of Mines’ e‑platform for mining tenement management (MTS) received national recognition in June 2025 for increasing regulatory clarity and efficiency ().
• Regional production surges: States like Rajasthan are scaling up exploration and legal mineral auctions—evident from 60+ pending block clearances and robust NMET activity.

2. Legal Framework Overview

India’s mining law framework involves central legislation backed by state enforcement.

• MMDR Act, 1957 is the core statute governing mineral licensing, lease structures, and regulatory safeguards.
• Mineral Concession Rules, 1960 detail the procedures for lease applications.
• Mineral Conservation & Development Regulations dictate operational standards.
• Mineral Auction Rules, 2015 enable transparent e-auctions.
• Mines Act, 1952 and oversight by the Directorate General of Mines Safety ensure worker safety.
• Environmental and waste regulations under the Environment Protection Act and Water & Air Acts require sequential clearances.

3. Entry Routes for Foreign Investors

India permits 100% FDI in mining and exploration of non-atomic minerals under the automatic route. FDI in coal/lignite (for captive use) also enjoys automatic approval. Sensitive minerals like titanium-bearing ores require certain conditions such as technology transfer and waste disposal.

Corporate Structures:

• Wholly-owned subsidiaries for full control.
• Joint ventures with Indian partners to leverage local strengths.
• Subsidiaries or partnerships, held directly or via Russian holding entities.

All must comply with FEMA, file capital remittance disclosures, and repatriate profits under RBI and tax treaties.

4. Permit & Licensing Process

To start mining business in India, you’ll typically follow this sequence:

1. Reconnaissance Permit (RP) – Initial geological study, max 5,000 sq km for 3 years.
2. Prospecting License (PL) – Detailed exploration.
3. Mining Lease (ML) – Granted for up to 50 years, depending on mineral.

ML applications are state-led and processed based on objective criteria like capability, investment capacity, and work plan. Russia’s expertise in exploration could be a deciding advantage.

Once granted, permits—especially Category A mines over 50 ha—must secure environmental clearance (EC) through EIA, public consultations, and pollution-control authorizations ().

5. Environmental & Compliance Obligations

India's mining framework emphasizes sustainable compliance:

• EIA & forest clearance: Required for mines on forest lands.
• Pollution board consents: Under Water, Air, and Hazardous Waste Acts.
• Progressive rehabilitation and mine closure plans must be integrated into planning.
• Worker safety: DGMS guidelines and Mines Act standards apply, necessitating local safety systems .

6. Revenue Share, Royalties & Taxation

India taxes mining via:

• Lease payments, royalties, and state-level fees.
• Revenue-share models for critical minerals now encouraging long-term investment.
• Corporate income tax and capital gains rules treat concession rights as assets .

On the upside, expenses on exploration/drilling are 10%—deductible upfront .

7. Incentives & Policy Schemes

• National Mineral Exploration Trust (NMET): Finances collaborative mineral mapping projects.
• Production Linked Incentive (PLI) includes mining under select schemes.
• Critical Mineral Mission: Rs 16,300 crore initiative focused on securing strategic minerals; features fast-track approvals.
• State-level mining policies: Rajasthan's e-auction and M-sand reform shows increasing investor focus.

8. Practical Guide: How Russians Can Get Started

1. Pre-feasibility & Partner Search
   - Identify states with suitable geology (e.g., Rajasthan, Odisha, Madhya Pradesh).
2. Register an Indian Subsidiary or JV
   - File registrations via MCA. Set up a corporate bank account.
3. Apply for Reconnaissance/Prospecting
   - Use the IBM MTS platform; navigate e-auctions and exploration rights.
4. Complete EIA & EC Stream
   - Secure public and forest clearance early to avoid delays.
5. Negotiate Mining Lease, Pay Fees
   - Submit financial bids during auctions, complete Lease Registration.
6. Plan Mining Operations
   Align with conservation standards: land rehabilitation, worker safety, DGMS readiness.
7. Comply with Tax & Royalty Regime
   - Monitor production volumes, ESAs, and share payments.
8. Expand & Innovate
   - Use NMET funds for deeper studies, explore mineral beneficiation, seize PLI and export prospects.

9. Risks & Mitigations

• Approval delays: like recent wetlands/environment hold-ups in Rajasthan emphasize due diligence.
• Policy shifts: evolving export/import stance, royalty design changes mean staying informed is vital.
• Community engagement: early public consultation reduces social tension and regulatory friction.
• Operational safety: Ensure DGMS compliance to avoid stoppages.

10. Why Russian Expertise Matches India

• Deep knowledge in geological mapping, heavy machinery, and large-scale opencast underground mining operates perfectly in India.
• Climate and terrain conditions often mirror remote parts of Russia—familiar territory for workforce and equipment planning.
• Russia’s strategic minerals, coupled with India’s drive for import-substitute critical minerals, form a synergistic entry point.

11. Case Snapshot: Rajasthan’s Mineral Drive

Rajasthan has fast-tracked auctioning M-sand units and mineral blocks using its policy reforms and digital systems—a textbook case of how state-level reforms catalyze investment. Rajasthan recorded Rs 1,306 crore revenue from mineral activity early in the fiscal year, reinforcing its position as India’s mining hub.

Conclusion

For Russian investors seeking to start mining business in India, the legal structure is transparent and evolving. From robust FDI entry paths and digital permitting to strategic incentives and multi-layered regulatory alignment, India now offers a viable entry for international mining players.

Success requires careful planning across:

• Legal structuring (subsidiaries, JV)
• License procurement and environmental compliance
• Tax optimization and incentives utilization
• Safety, rehabilitation norms
• Long-term strategic partnerships

India’s vast mineral wealth, paired with global ambitions in critical minerals, positions it as a strong magnet for Russian capital and technical expertise. With comprehensive preparation and local engagement, Russian mining firms can forge substantial long-term returns in India's booming mining ecosystem.