India's mineral import costs hit Rs 10.12 lakh crore in FY26, highlighting a large gap between domestic demand and local production. Despite auctioning over 720 mineral blocks since 2015, only 105 have become operational. Recent legislative changes, including the 2026 amendment to standardize state levies, aim to resolve these bottlenecks and lower import reliance.
India’s reliance on external sources to meet its mineral requirements reached a significant scale in FY26, with the import bill totaling Rs 10.12 lakh crore. This number underlines the ongoing challenge of meeting the country's rising demand for industrial raw materials—such as coal, iron ore, and other critical minerals—through domestic production. For sectors like power, steel, and manufacturing, this import dependency creates vulnerability to global price volatility and supply chain disruptions.
The Auction-to-Production Gap
The government has conducted an extensive exercise to auction mineral assets, offering over 720 blocks to the private sector since 2015. However, moving from an auction win to actual output has proven to be a difficult hurdle. Currently, only 105 blocks are operational, which accounts for roughly 14 percent of the total auctioned sites. This low conversion rate means that a large volume of mineral assets remains idle, failing to contribute to the national supply chain despite being legally allocated to developers.
New Law to Standardize Levies
To address the systemic issues delaying project start-ups, the government introduced the Mines and Minerals (Development and Regulation) Amendment Act, 2026, which came into effect on August 22, 2026. This legislation introduces Section 9D, which creates a standardized framework for state-level levies. Historically, a fragmented tax environment and varying state-level rules have discouraged large-scale, long-term capital investment. By centralizing the regulatory logic while still allowing states to manage leases and collect revenue, the government hopes to create a more predictable climate for companies to deploy capital.
Revenue vs. Productivity
While industrial output has lagged, the financial benefits for state governments have been substantial. Between FY15 and FY26, states collected Rs 7.67 lakh crore in revenue from the sector. Odisha has been a notable contributor, with 35 operationalized blocks out of 79, though dozens of other sites across the country remain stuck in administrative limbo. This discrepancy between the revenue earned by states and the actual minerals extracted represents a lost opportunity to reduce the national trade deficit and lower input costs for Indian industry.
Looking ahead, the success of the new regulatory framework will depend on how quickly these policy changes translate into higher production on the ground. The government is also working to align the 656 District Mineral Foundations with a broader national strategy to unlock these dormant resources. For investors, the most critical monitorable will be the speed at which newly auctioned blocks move into the commissioning phase, as this will determine the trajectory of import dependency and the margin health of user industries.