Mining Industry of India: An Analysis

2615 words (10 pages) Essay in Economics

04/10/17 Economics Reference this

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This paper discusses mining industry as an informal sector of the Indian economy. Mining industry has great importance in any economy like Indian economy. We venture to understand, analyze and interpret the trends and significance of the mining industry in Indian economy. Mining has positive effects on the Indian economy in terms of government revenue, tax, employment generation, exports and net foreign exchange. In addition, negative impacts in terms of environmental degradation. Mining processes effect environment during both the mining activities and years after the mining is closed. Light has been put on policy issues, which are acting as impediments in the growth of mining industry. Other than policy issues, there are many other challenges like infrastructure, capacity building etc. Mining industry is facing which falls in the domain of this paper.


Mining is a process in which minerals, which includes metal, coal, oil shale, gemstone, limestone, rack stone, gravel etc. These are required for different purposes like construction; medicines, power generation etc. are dogged out of the earth. There are mainly two types of mining. One is surface mining, in which mining is done by removing surface vegetation, dirt, soil and if necessary, layers of bedrock in order to reach buried ore deposits. Surface mining techniques areopen pit mining, landfill mining,and quarrying, stripping, mountain top removal. Second type of mining is sub-surface mining in which mining has done through digging tunnels or shafts into the earth to reach the buried ore deposits. Sub-Surface mining techniques are Drift mining, Slope mining, Shaft mining. Another kind of mining is in-situ leading method by which important elements and uranium has dogged out. Mining industry is fulfilling the demand of minerals and conducting the mining activities. It consists of both private and public sector. Mining has its own importance in any economy. India is blessed with rich amount of natural resources. India have stock of 87 minerals out of which 10 are metallic minerals, 47 non metallic minerals, 13 atomic minerals, 04 fuel minerals and 23 are minor minerals. It contributes 2 percent share of gross domestic product (GDP) and is positively correlated with the growth. The growth of mining industry leads to the growth of an economy. It has forward linkages with other industries of the economy. It provides row materials to the other industries such as power, steel, cement, chemicals, transportation, construction etc.

Mining industry in India, it hardly needs any justification that mining as a key industry is contributing to the growth of Indian industrialisation. It is benefiting the development of other important industries such as power, steel, cement etc. According to an analysis by Fedration of Indian Chamber of Commerce and Industries (FICCI), an increment of 1.2-1.4 percent and 3 percent in growth rate of Indian industrial production and in Indian GDP respectively, is channelized by one percent increment in the growth of mining and quarrying. In present times, mining is adding 2 percent in GDP and government of India has targetted to achieve the level of 5 percent of GDP. This call for a growth of 10-12 percent per annum in mining industry. However, the sector is suffering from negative growth trend from two consecutive years. In 2011-2012, shows a serious decline in growth attitude of minus 0.6%. Due to policy paralysis, mining sector has faced tough time during last years. Both at central and state levels there is issues of delay in matter clearance, land acquisition problems, corruption in auctions, benefits to government agencies those are poor in work efficiency as compared to private agencies, in assigning contracts. However, India has granted mining lease for 20-30 years. There are 3180 operational mines in India. India has second rank in the production of barites 3rd in coal and lignite and steel production. It is assumed that India will become the second largest producer of steel by 2015. India has 4th place in iron ore production during 2009-2010. India has 5th and 6th largest reserves of iron ore and bauxite resources respectively. We have 7th and 8th rank in aluminium and copper ore production respectively. There is an increase with 8.2 percent compund annual growth rate(CAGR) of crude steel production during 2008-2011. The ministry of mines government of India is controlling and regulating the functioning of mining industry in India. Other main agencies, which are working for this sector, are Federation of Indian Mineral Industries, the Geological Survey of India, the Indian Bureau of Mines, and the Aluminium Association of India. Foreign investors that are active in Indian mining sector are BHP billiton (Australia), Riot Tinto (Australia), Vedanta Resources (UK),JFE Steel Corporation ( Japan), China Steel Corporation ( Taiwan) ,NSL consolidated (Australia), Kolar gold (Germany). The major states that have registered an increase in value of production over recent years are Chhattisgarh (41.94 percent), Himachal Pradesh (41.81percent), Bihar (32.77 percent), and Odisha (34.64 percent). There is an increase in index of mineral production (quantum index, base year 1993-94=100) from 131 to 205 for all minerals during 2000-2001 to 2010-2011. Economic survey of India divides the industrial sector in to manufacturing, mining, electricity and construction. Economic survey finds that contraction in mining activities is one of major reason for low industrial performance and slowdown of growth. There is 1.4 percent decline in mining sector G.D.P. in 2013-14 and 0.6 percent contraction in output of mineral index. This continuing contraction is due to lower production of major minerals like coal and lignite, crude petroleum, iron ore and natural gas. it also focus on the environmental degradation such as water, air ,coastal and marine, health hazards , degradation of natural eco-system due to mining activities in the form of metallic and non metallic minerals extraction, brick-making, fossil fuel as a source of energy, cement, coal production. It suggest to remove bottlenecks from infrastructure such as augmenting coal production, permitting commercial coal mining, restructuring power distribution, upgrading road and rail network, land acquisition , reducing delay in regulatory approvals, solving financial constraint and adopting public private partnership model. In UNION BUDGET 2014-2015 finance minister has announced to allow changes in MMDR Act 1957 to boost investment in mining sector. Basic custom duty on coal-tar pitch, steel grade limestone and steel grade dolomite is being reduced from 10% to 5% and 5% to 2.5% respectively. A proposal of laying and operating a slurry pipeline for the transportation of iron ore is presented to increase investment in the sector related to mining.

Literature Review


Argued that the minerals resources of the world is depleting down and this require a serious notice and regulation for their exploitation ativities . benifits of forth coming genresations has to be taken in to mind while the extraction of minerals. Minearals resources are being wasted during production and consumption. Some peple argued that extraction . but taxation and regulation would be better way for the increase in efficiency of mining.

Ministry of Mines (November -2011)

According to ministry of mines in its strategy paper, three key trends are observed by the mineral sector. There is rising demand against supply and increase in cost of mining. World economy is on expanding to new geographies. India is sadly expending so less on exploration activities. Inspite of the Government adopting progressive policy during last decade GDP from mining sector of India is constant at 1.2 percent. The CAGR of Indian mining sector is 6.8 percent compared to 22 percent in China. It is to note that only 0.3 percent of population is employed by Indian mining sector as compared to 3.8 percent in South Africa. According to ministry of mines, there is a need of transformation in the Indian mineral sector by expanding reserves, adopting scientific exploration, concept of sustainable mining, reducing permit delay, creating awareness and implementation of effective government structure. India should enhance mineral production and mining activity to fulfil the increasing demand of mineral by improving infrastructure, humane capital and improving its policy.

University of Science and Technology Linoning

According to this ecological mining is in its beginning stage and in tune with sustainable development. Sustainable development of mining depends on proper utilization of resources and wastes, proper prosecution of law and legislation and by improving the ecological environment for mining pessimistic environmental situations, reduction in the qualities of minerals, low level of wide ranging use of resources, absence of centralized system for mining market and lack of strict law to improve the working of mining industry both development of resources and protection of environment taken in to consideration simultaneously.

Arpita asha Khanna

After independence to meet the energy demand of the country coal has played important role. In 2007, coal industry has turnover of Rs 340 billion. There are challenges in the production of coal like other sectors. It is contributing to Indian economy a lot. Nevertheless, there are many impediments responsible captive mining and slower the speed of development of coal sector. Legislative and regulatory framework is very time consuming in allotting auction and in giving approval and clearances. Land acquisition process is not correct that is why many issues occur during the land acquisition. There are policies that are fundamentally weak or imperfect in strategy. Mining impact the environment and ecology negativity unless carefully planned and controlled. Some impacts are felt immediately and some are realised over long-term. The environmental impact that occurred because of exploration activities are depreciation of forests, damage to biodiversity, air pollution, land degradation due to drilling, blasting, underground mining, extraction etc. there are many environmental legislations formed by Indian government. Like environmental protection act (1986)' water act (prevention and control) act 1974, air (prevention and control of pollution) act 1981. But problems are not in the absence of regulation but in the enforcement of them. That is due to lack of co ordination in the various government departments and institutions. Lack of skilled human capital and inadequate availability of equipment are main reasons for regulatory failure. ICMM Mining industry has a first position in the supply chain of resources. It has an important place in the world economy. Its role is increasing by the time. It has importance in job creation and poverty reduction. In the 2010, the nominal value of world production was nearly four times then it has been in 2002. In so far as production and income generation are critical forces in poverty reduction, mining has increasingly significant role to play. India has 7th rank in the world production with 5.6 percent of production value in 2010 and 26,042 million US $production value. A minerals exports contribution of India is 17.9%. The emerging evidence indicates that mining FDI combined with increased foreign exchange earnings can be a catalyst for some countries to improve their credit rating and attract long-term loan funding from abroad. The contributions of mining in the government revenue is in the term of FDI, Total national investment, exports, net foreign exchange earnings, employment and wages. Mining contributes to low and middle income countries in terms of foreign exchange earnings. Low and middle-income countries score relatively higher in the M.I.C (mining contribution index). Ellis Connolly and David Orsmond

Analysed that prices of commodities are rising, because growth of global demand is more than the growth of global supply. Global commodities prices increased during the 2005 due to developing economies. The prices of minerals products are showing increasing trends and this indicate to explore mining activities globally.

ASA and Associates L.L.P

The history of Indian mineral sector is approximately 6000 year old. This has increased to greater extant in the current time. Taking into consideration the potential of mineral sector Indian government in its new mineral policy has been opened the ways of private investment. As the result, it had become a sector of global interest. Private partnership in the mineral sector is important for the growth and development of the mining industry. In this way, the NMP has expressed different rights to in favour of private agencies. NMP assured the transfer of mineral concession and transparency in allotment of grants. For the efficient use of mineral resources and improvement in the life of people. NMP is seeking to develop a sustainable framework. This tries to introduce uniformity in mineral administration. But there are many other things to consider, like minerals should be exported in value added form, for stability and inciting production long term policy is required. Many investment incentives such as eligibility of 5 years tax holiday, 100 percent depreciation is allowed on environmental protection and pollution control equipments, low custom duties on metals that are used in capital equipment. Opportunities that are lying in mining industry are development and production bog surplus commodities such as iron and bauxite, mica, low-grade ores.

FICCI Analyse that India has long been as a nation well endowed in natural mineral resources. India ranked 4th amongst the mineral producer countries and ranked 8th based on value of mineral production, during 2009. There is significant mineral potential that still lay untapped in India. FICCI felt the need of highlightsthe issues and concerns for harm various minerals present across the country as on collected documents. There are certain general and broad areas of concern, which needs concerted government action. Emphasis is required on development of mineral deposits by way of prospecting and zero- waste mining.

Prof. Mahima Mishra and Dr Subhangi walvekar Analyse that India is reach in mineral wealth and provide supply to both domestic and international market. For the promotion of funds, technology and managerial expertise in the mining, government had opened the doors of FDI in 1993.50percent investment involving foreign equity in mining projects were introduced. In addition to this 74 percent investment is allowed to services incidental to mining They have find many problems in the way of optimisation of minerals growth such as illegality in mining sector, unpredictable shutdowns , disintegration in strategy of development, lack of long term vision and policies. There is need of setting Lokayukta and strong regulation, innovation, approaches like inclusion of local government, corporate social responsibility to PSUs and MNCs, improvement in technology through collaboration with global mining leaders. Logistic configuration is required between mines, plants, railway and parts. Sustainability issues have to notice. There is lack of scientific practices and advance geological instrumentation. There is no distinction in companies those are adopting scientific and good environmental practices and those who do not.

The review of ths studies reveals that there are research gaps and justify the need of continuos research and thus the present attempt.


The objectives of the study are:

  1. To know the significance of mining industry in Indian economy.
  2. To measure the trends in the mining industry.
  3. To analyse the efficiency of mining industry.
  4. To draw the policy implications flowing from the findings of the study.

Research methodology

Research requires collecting related data and analysis of that data in systematic manner. This paper is an analysis of mining industry in which different studies are broken in to different pieces and interpreted to achieve the motive of this paper. This paper is base on explanatory research.

  • Literature research, in order to analyse the topic was done in addition to get clear understanding of the chosen area for the research.
  • Different sources related to topic were identified.
  • Secondary data is used for the propose both qualitative and quantitative data is used in this paper.
  • Data collection consists of govt. Websites, reports by different agencies and research paper related the concern topic.
  • Different challenges and issues are recognised to the related area.

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