India has been blessed with a large and varied basket of minerals and it possesses the raw materials to supply sectors such as power generation, gas distribution, iron and steel, fertiliser, cement, etc. Those resources are spread across multiple states such as Odisha, Chhattisgarh, Rajasthan, Karnataka and Jharkhand.
The mining industry was in the doldrums with a combination of scams, poor operating practices and court-imposed bans holding up development. But mining has lately been a focus area for policymakers and there have been determined efforts to turn the sector around. Those efforts should lead to enhanced activity in the near future. Investments have already started flowing into a variety of projects, with more plans on the anvil. However, certain critical issues must be tackled in order for the sector to fulfil its potential.
The central government has managed to push through some crucial legislation in the form of the Mines and Minerals (Development and Regulation) (Amendment) Bill, 2015. Another positive development has been the coal black auctions, which received a very positive response and helped bring some transparency to allocations. This has coincided with higher coal production by Coal India Limited, which in turn, has meant better performance from power generators. The lifting of court-imposed bans on iron ore mining has also led to a positive change in sentiment for the sector. However, the fourth round of coal auctions has been held up and iron mines in Goa, for instance, have not yet started operating again.
The sector cannot improve its operational performances beyond a point without the induction of better technology and the skilling of workforces to put equipment to better use. Miners are reluctant to make major investments in equipment because their margins are under pressure and they cannot afford large investments at the moment. The Indian equipment industry is under pressure from cheap imports from countries like China and Malaysia. It would be helpful if the Make in India initiative laid some emphasis on this specific area of manufacture.
Going forward, state governments also have a big role to play. The states need to improve their processes and policies to speed up clearances for mining.
Mining is long gestation and capital intensive in nature. It has a huge influence on the health of downstream industries. Unfortunately, it has never delivered to potential. The steps taken should help to improve ground conditions but it will take time for the benefits to be fully apparent.
In the meantime, policymakers must look to ease the transfer of mining leases, speed up statutory clearances and approvals, etc. Keen attention must also be devoted to addressing environmental concerns and opposition to projects by local populations. Unless sustainable technologies are adopted and the concerns of local citizens addressed, the industry will keep running into political issues.