India is blessed with the production of 95 minerals– 4 fuel-related minerals; 10 metallic minerals; 23 non-metallic minerals; 3 atomic minerals; and 55 minor minerals (including building and other minerals). Mining is one of the core sectors of Indian economy and acts as a catalyst of growth for major industries like power, steel, cement, etc., which, in turn, are critical for the overall development of the economy. India is the third largest producer of coal and chromite, fourth largest producer of iron & manganese ore and sixth largest producer of bauxite.
Capacity and Production
India accounts for around 8 percent of the world’s iron ore deposits. The production of iron ore reached 204 million tonnes in 2019- 20. The demand of iron ore is expected to rise to 208 million tonnes by 2020-21 and 257 million tonnes in 2023-24. The production of coal,on the other hand,increased from 606.89 million tonnes in 2018-19 to 958 million tonnes in 2019-20.
The index of mineral production of mining and quarrying sector increased by 1.7 percent in 2019-20 as compared to previous year growth of 2.84 percent in 2018-19. During April- June 2020, the IIP for the sector stood at 83.9, registering decline of (-)22.4 percent as compared to corresponding period of the previous year.
India is one of the largest exporters of iron ore in the world. The exports of iron ore grew exceptionally in the past five years and registered CAGR of 38.5 percent during FY15-20, increasing from US$ 515.3 million in 2014-15 to 2624.96 in 2019-20. During April- June 2020, the exports of iron ore and minerals stood at US$1374.76 million and recorded growth of25.51 percent, as compared to corresponding period of the previous year. The export of bulk minerals registered a CAGR of 7.32 percent during FY15-20. The export of other minerals such as ‘mica’, ‘coal, coke, and briquettes etc’, ‘granite, natural stone, and product’, ‘Sulphur, unroasted iron pyrite’and ‘other crude minerals’ registered negative CAGR (-)1.26, (-)2.60, (-)0.47 and (-)1.87 respectively, during FY15-20. The export of processed minerals also registered negative CAGRof (-)1.7 percent during FY15-20, declining from US$ 1034. 4 million in 2014-15 to 948.54 million in 2019-20.
Trends in Export of Select Minerals
(In US$ Million)
|Description||2014-15 Value||2015-16 Value||2016-17 Value||2017-18 Value||2018-19 Value||2019-20 Value||April-June 2020-21 Value||
|Coal, coke, and briquettes etc||136.51||160.45||164.57||167.82||171.63||119.68||14.84||-2.60|
|Bulk minerals and ores||443.94||550.51||419.21||402.17||618.05||631.94||92.24||7.32|
|Granite, natural stone, and product||2019.82||1832.58||1856.08||1942.67||1974.14||1972.37||163.10||-0.47|
|Sulphur, unroasted iron pyrite||60.57||78.93||52.13||66.37||63.05||55.13||24.29||-1.87|
|Other crude minerals||152.26||108.02||131.84||146.13||174.67||161.55||25.93||1.19|
|Source: DGCIS, Exim Bank Research|
FDI of upto 100 percent is allowed under automatic route for the mining and exploration of metal and non-metal ores including diamond, gold, silver and precious ores in India. FDI of up to 100 percent is also permitted under the automatic route to explore and exploit all non-fuel and non-atomic minerals and process all metals as well as for metallurgy. In March 2018, the government allowed 100 percent FDI in coal mining under automatic route as well. Under the Government approval route, 100 percent FDI is also allowed in mining and mineral separation of titanium bearing minerals and its ores.
Mining sector in India accounted for US$ 2.73 billion of FDI, accounting for 0.58 percent total FDI inflows during April 2000 to March 2020.
The Metals and Mining sector in India is expected to witness major reformsover the next few years, owing to reforms such as Make in India Campaign, Smart Cities, Rural Electrification and a focus on building renewable energy projects under the National Electricity Policy,2019. According to an EY report on Indian Metals and Mining, despite improving competitiveness of renewables and gas-fired technology, coal is likely to remain the dominant source of energy in India till 2035, due to increased availability of domestic coal, sector optimization via regulatory changes and limited gas availability. While expanding solar and wind capacity will cut the share of coal in energy mix in long term, the demand for coal is expected to remain strong.
The recent commercialization of coal mining auctions will lay strong foundation for energy security in the country and provide large scale employment as well as huge opportunities for investment in coal sector. These efforts are expected to supplement coal production of 1 billion tonnes by 2023-24 and fulfill the domestic requirement of thermal coal in India.
Select Government Incentives