National Mineral Policy 2006 - Department of Mines

• In addition to the above, the Committee recommends the following changes:(i) Section 11(3)(d) should be amended to provide not only for the applicant topropose investment in industry but also for the applicant to have a tie-up withan associate company with necessary experience to make such investment;(ii) Rule 35 should be deleted as it is redundant;(iii) As proposed in Chapter 1, Rule 27(3) should be deleted. In its place, a ruleshould provide that where an application had been accepted on the strength ofthe proposal for investment in industry based on the mineral, a condition couldbe imposed to ensure that the concessionaire abides by the commitment. [5.16]AUGMENTING STATE REVENUESGUIDELINES FOR ROYALTY RATES• Section 9(3) of the MMDR Act provides that royalty and dead rent should be fixednot more than once in every three years. The last revision in the rates of royalty anddead rent was notified by the Central government on 14 October 2004, and the nextrevision is due in October 2007. The Ministry of Mines should set up a study group towork out detailed rates of royalty, dead rent, and other levies on the basis ofrecommendations made by this Committee. [6.8]• The method of fixation of rates of royalty should move forward decisively on thebasis of ad valorem rates. For retaining specific rates for any mineral a very strongrationale should be required. The first step for the change should be conversion of thespecific rates recommended by the Study Group set up in May 2002 into ad valoremrates on the basis of the price data for the period taken into consideration by the StudyGroup, i.e. 2001–02 and 2002–03. In considering raising the ad valorem rates further,the rates prevailing in Western Australia would be taken into consideration as a pointof reference as the Committee feels that the rates prevailing in Western Australia are agood benchmark for determining the competitiveness of royalty rates. If the WesternAustralian rates are higher than the rates applicable in India there should be nohesitation in raising the rates to that level, unless special factors are brought forwardsuch as the cost of mining operations. If the ad valorem rates work out to higher ratesthan those obtaining in Western Australia the existing rates should continue for the213