Best mining practices in Indian states

Innovative policy interventions and sustainable mining practices are crucial to make India self-reliant in mineral supply and develop a next-gen mining ecosystem.

The article is written by Abhijit A. Kulkarni, Partner, Mining and Metals, EY India and Badri Parthasarathy, Director, Business Consulting , EY India.

In brief

• India’s mining sector has untapped potential with reserves accounting for ~20% of total global resources but contributing only 2% to GDP.
• Adopting global and state-level best practices can enhance mineral administration, sustainability, and technology adoption.
• Collaboration among stakeholders is key to implementing policy, technology, and economic reforms for a more efficient mining sector.

India is endowed with vast mineral resources, including coal, iron ore, bauxite, and chromite, yet the mining sector contributes only 2% to the country’s GDP. This is significantly lower than mining-dependent economies like Australia, where mining contributes around 12% to the GDP. Despite having substantial reserves, India remains reliant on imports for critical minerals such as coking coal, copper, and rare earth elements.

The ‘Report on states’ best practices in mining’, based on extensive consultations with stakeholders from state and central governments, industry leaders, and regulatory bodies, identifies best practices implemented by different Indian states and compares them with leading international examples. These case studies highlight key reforms in mineral administration, sustainability, and technology adoption that can significantly enhance India’s mining sector.

Challenges in India’s mining sector

One of the primary challenges in India’s mining sector is the limited depth of exploration. Most exploration activities are restricted to shallow depths of 50-100 meters, versus up to 300 meters globally, preventing discovery of deeper, high-value mineral deposits and reducing overall resource utilization.

The approval process for mining projects is another major bottleneck. Obtaining necessary permits and environmental clearances can take four to five years, against six months in leading mining economies. This discourages private investment and slows down the pace of mineral extraction.

The tax burden is among the highest in the world at an effective tax rate exceeding 50% of revenue while the global average is 35%-40%. This impacts Indian mining’s competitiveness. Inefficient logistics and inadequate infrastructure further add to the cost of mining operations.

Another pressing concern is environmental sustainability as mining activities often lead to deforestation, water pollution, and biodiversity loss. With increasing regulatory scrutiny and social expectations, mining companies need to adopt more responsible extraction methods and other sustainable mining practices. 

Global best practices in mining

Leading mining economies have implemented various strategies to optimize mineral administration, promote sustainability, and drive technology adoption.

In Australia, states like Western Australia and Queensland have streamlined the approval process through digital platforms that allow simultaneous submission of mining lease applications and environmental permits. This has significantly reduced redundancy and enabled faster decision-making. The introduction of fixed approval timelines—typically within 90 days—has created a predictable regulatory environment, encouraging greater investment.

Canada has focused on sustainability initiatives through its Towards Sustainable Mining (TSM) framework, which sets guidelines for tailings management, biodiversity conservation, and community engagement. Green mining technologies have improved energy efficiency by 40% and reduced carbon emissions by 35%.

South Africa has strengthened environmental regulations by mandating pre-approval comprehensive Environmental Impact Assessments (EIAs). Water management compliance is strictly enforced to prevent pollution.

In South America, Brazil and Chile have introduced integrated licensing systems for environmental and mining permits, while automated permitting systems enable real-time tracking of applications. Early stakeholder engagement in Chile has helped prevent social conflicts and legal disputes.

Recommendations and way forward

To enhance competitiveness and efficiency, the report outlines five key strategic pillars for reform.

Focus on governance and administration:

Implementing a single-window clearance system for mining permits can significantly reduce delays. Standardizing reporting frameworks and compliance requirements across states would improve regulatory transparency.

Economic reforms:

Rationalizing the tax structure can attract more investors. Encouraging value addition by promoting mineral processing industries within India can reduce reliance on raw material exports and boost domestic industrial growth.

Technology and infrastructure development:

Adopting digital platforms for real-time monitoring can improve regulatory oversight. Dedicated mining corridors and freight infrastructure can reduce logistics costs and enhance the overall efficiency of the supply chain.

Sustainability and environmental responsibility:

Critical for long-term growth, measures would include strict enforcement of mine rehabilitation policies, afforestation programs, and water conservation measures to prevent irreversible environmental damage. Green mining technologies should be incentivized to reduce emissions and promote energy efficiency.

Skill development and industry integration:

Strengthening mining education programs, expanding vocational training, and creating job opportunities for local communities will help build a highly skilled workforce while mining industry-academic collaborations can drive research and innovation in sustainable mining practices.

India’s mining sector has immense potential to drive economic growth and industrial development. However, to unlock this potential, it is essential to address existing challenges in approvals, taxation, infrastructure, and sustainability. By adopting global best practices and replicating successful state-level initiatives, India can enhance transparency, efficiency, and environmental responsibility in mining operations.

A coordinated effort between government agencies, industry stakeholders, and research institutions is crucial for transforming India’s mining sector into a globally competitive and sustainable industry. With the right policy interventions and technological advancements, India can establish itself as a leader in responsible and efficient mineral resource management.