National Mineral Policy 2006 - Department of Mines

subject to overt and covert restrictions on interstate movement. Fragmentation of the singleeconomic space within the country could lead to misallocation of resources.5.6 The arguments of both the mineral-rich states and the mining industry and states thatare not mineral-rich undeniably have some logic from the economic and socio-economicperspectives. In the interest of the development of India’s mining sector, it is necessary toresolve this debate to the maximum possible satisfaction of all sides or, if possible, on thebasis of Pareto optimality. A policy of value addition within the state in which the mineral isextracted can potentially bottle up altogether economic activities in relation to the mineraldeposits. If a downstream industry is not viable at a particular location such a policy couldresult in a situation in which there is neither downstream industry nor mining activity. Thiswould not only deprive the country of the benefits that can flow from resource exploitationfor industry and trade but would also deprive the state of the benefits that a large miningproject can bring. These include employment benefits, tertiary sector spin-offs, infrastructuredevelopment, etc. It is better for the mineral-rich state to get mining activities going andanother more suitable state to get the industry rather than neither getting anything at all.5.7 On the other hand, if it is possible to get both industry and mine within a state withoutsacrificing the economic viability of the latter there is no reason why the applicant should notbe offered inter se preference vis-à-vis projects of stand alone miners. Minerals belong to thestate, and as long as there is no wastage of resources or elements of hidden subsidisation,value addition within the state should be welcomed. The caveat here is that the best judge ofeconomic viability is the market and not the state. It would not make sense for the state tohold back an application for LAPL/PL or ML simply because none of those interested inmining are interested in putting up a downstream unit. However, if there are multipleapplicants for a LAPL/PL or ML for a particular ore body in the public domain thenpreference may be legitimately given to the applicant whose mining operations will also leadto a downstream unit that uses the mineral from that mine coming up in the state itself.5.8 The procedures for obtaining PLs or MLs in respect of land in which the minerals vestin the government, as laid down in Section 11 of the MMDR Act, contain some ambiguitiesthat enable state governments generally to hold back applications for RP, PL, and ML that donot envisage the establishment of downstream units. Section 11(1) provides that where a RPor PL has been granted for any land, the holder shall have a preferential right to a PL or ML,114