Mining Industry

The mineral deposits in a country constitute the foundation pillar of the industrial and economic growth of any nation. India has been endowed with mineral resources in mammoth proportions. The growth and prosperity of a nation depends on the search, development, and management of its valuable mineral resources.


The mines and minerals (Development and Regulation) Act of 1957 and the Mines Act of 1952 were passed by the government of India and together form the fundamental laws governing the mining sector in India. The government of India also formulated the National Mineral Policy to permit private investments in the mining sector.


The government of India offers a wide range of concessions to foreign investors in the Indian mining industry. Some of the main concessions include:

  1. Mining in certain specific backward districts of India is eligible for a total tax exemption for a period of 5 years from the date of commencement of production. Further 30% tax exemption is allowed for 5 years thereafter.
  2. Investors are eligible to get back 100% depreciation cost on the usage of certain equipment, such as environment protection equipment, pollution control equipment, and energy-saving equipment.
  3. The foreign investors are also eligible for concessions on export profits on exports of certain minerals and ores.
  4. The foreign investors are also subject to low custom duties on capital equipment used for minerals, such as tin, nickel, pig iron, and aluminum.
  5. The foreign investors are granted exemption from excise duties on minerals in their finished form.
  6. About one-tenth of the total expenditure incurred by the foreign investors in the extraction or production of certain minerals during five years ending with the first year of commercial production is allowed as a deduction from the gross income.


Apart from these gains from tax exemptions, foreign investors investing in the Indian mining industry are set to gain other advantages.


India's strategic location is one of the most attractive features for investing in the Indian mining industry. Its close proximity to the developed European market and the fast-developing Asian market makes it an ideal destination for the export of steel and aluminum.


India is the world’s largest producer of mica and the third-largest producer of coal and lignite. India also ranks among the top countries producing iron ore, aluminum, and manganese ore. Thus, there is no shortage of raw materials for investors.


India also has a large quantity of mineral resources, which are of supreme quality. Thus, investors have access to high-quality mineral resources, and they can gain tremendous returns on their investments.  
Investors will be able to access a large supply of laborers and in large numbers. Also, the labor cost and the conversion of raw materials into finished goods cost is relatively less expensive than most countries.


The exploration of diamond, copper, lead, zinc, nickel, and gold offers great potential for valuable returns on investments.


There is also immense potential for setting up manufacturing units for value-added products.


The current economic mining practices carried out in the country are restricted to depths of about 300 meters. However, about 25% of the country’s reserves are beyond this depth. Thus, there is great potential for investors to exploit the reserves and gain tremendous returns.


Thus, the government incentives, strategic location of the country, and the promising future of the industry make India a wonderland destination for investing in the mining industry.