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| Investment
Incentives |
The government offers a wide range of concessions to investors in
India, engaged in mining activity. The main concessions include:
Direct
Taxes:
- Mining
entities in specified backward areas are eligible for a complete
tax holiday for a period of 5 years from commencement of production
and a partial tax holiday thereafter.
- Environment
protection equipment, pollution control equipment, energy saving
equipment and certain other equipment eligible for 100% depreciation.
- One
fifth of the expenditure on prospecting or extracting or production
of certain minerals during 5 years ending with the first year
of commercial production is allowed as a deduction from the total
income.
- Export
profits are eligible for the concessions under the Income Tax
Act.
Indirect Taxes:
- Minerals
in their finished form exempt from excise duty.
- Low
customs duty on capital equipment used for minerals; on nickel,
tin, pig iron, unwrought aluminium.
- Capital
goods imported for mining under EPCG scheme qualifies for concessional
customs duty subject to certain export obligations.
- Capital
goods imported for mining under EPCG scheme qualifies for concessional
customs duty subject to certain export obligations.
Financial support for Mining:
Innovative financing schemes like metal loans, mezzanine financing,
etc. designed for foreign firms and JV companies.
Large Area Prospecting:
To boost exploration and detailed prospecting of high value and
scarce minerals, the area for prospecting has been increased from
25sq.km to 5,000 sq.km for a single lincence, and 10,000 sq.km
for aerial prospecting.
Institutional Framework:
- The
Ministry of Mines regulates and promotes the activities of mining
in the country and is responsible for:
- Surveys
and exploration of all the minerals, other than coal, natural
gas, petroleum and atomic minerals.
- Mining
and metallurgy of non-ferrous metals like aluminium, copper, zinc,
lead, gold, nickel.
- Providing
administration for prospecting and mining laws.
- The
MMRD Act and the Mines Act which constitute the basic laws governing
the mining sector are promulgated by the Central Govt. The relevant
rules in force under the MMRD Act are the Mineral Concessional
Rules, 1960, outlining the procedures and conditions for obtaining
a prospecting licence or a mining lease, and the Mineral Conservation
and Development Rules, 1988 that lay down the guidelines for ensuring
mining on a scientific basis and without environment degradation.
All the major minerals come under the purview of the Central Govt..
Minor minerals are separately notified and come under the purview
of State Govts. Who have formulated Mineral Concessional Rules
for this purpose.
- In
the federal structure, the State Government is the owner of minerals
in their respective territorial jurisdiction. In offshore areas,
exclusive economic zone and the continental shelf, the rights
are vested in the Central Govt.
- High
quality geological databases have been generated by national agencies
like the Geological Survey of India, Mineral Exploration Corporation,
National Remote Sensing Agency, National Geophysical Research
Institute and Indian Bureau of Mines. This database is accessible
on a commercial basis and makes investment in mining exploration
in India a low-risk investment proposition. In addition to the
above, there exists a Federation of Mining Industries (FIMI) which
is an association of all those engaged in the business of mining.
FIMI from time to time suggests to the Govt. desired changes in
the prevailing mining policy that would facilitate improved activities
in the sector.
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