INDIA Law and Practice Contributed by: Vishnu Sudarsan, Kartikeya Gajjala and Mehar Vasant, J Sagar Associates
5. Mining Investment and Finance 5.1 Attracting Investment for Mining Foreign Direct Investment (FDI) The central government has permitted FDI up to 100% under the “automatic route” (ie, without requiring prior government approval) with regard to the mining and exploration of metal and non- metal ores, including diamonds, gold, silver and precious ores. Ease of Doing Business The Department for Promotion of Industry and Internal Trade has spearheaded reform aimed at improving India’s business regulatory envi - ronment, in co-ordination with various central ministries/departments, states and union ter - ritories. The reform initiatives are focused on streamlining existing regulations and processes, and eliminating unnecessary requirements and procedures. They cover areas such as reducing the compliance burden to improve the overall business regulatory environment in the country. Production-Linked Incentive Scheme The central government has announced a pro - duction-linked incentive scheme for specialty steel. The scheme envisages a financial outlay of INR6,322 crore. The objective of the scheme is to promote the manufacturing of such steel grades within the country by attracting signifi - cant investment and helping the Indian steel industry to mature in terms of technology as well as moving up the value chain. As of December 2023, companies have already invested around INR12,900 crore against an investment commit - ment of INR21,000 crore. The Ministry of Steel envisaged an investment of INR10,000 crore in FY 2024–25. Memoranda of understanding have been exe - cuted to attract an investment of INR29,500
crore, create an additional production capacity of 25 million tonnes, and generate approximately 17,000 new jobs by FY 2027–28. 5.2 Foreign Investment Restrictions and Approvals in the Exploration and Mining Sectors As noted in 5.1 Attracting Investment for Min- ing , 100% FDI is allowed in India under the auto - matic route in the area of mining and the explo - ration of metal and non-metal ores, including diamonds, gold, silver and precious ores (sub - ject to the provisions of the MMDR Act). However, FDI in the mining of titanium-bearing ores (an atomic mineral) is subject to govern - ment approval, and no FDI is permitted in certain prescribed atomic minerals. 5.3 International Treaties Related to Exploration and Mining The central government has been working to strengthen its co-operation in the area of geolo - gy and mineral resources with mineral-rich coun - tries such as Australia and Russia, and with Afri - can and Latin American countries. To this end, numerous memoranda of understanding have been signed or are proposed to be signed with mineral-rich countries, including, more recently, with Argentina and Cote D’Ivoire in the field of geology and mineral resources. Commencing in the 1990s, India has been par - ty to a number of bilateral investment treaties aimed at the reciprocal promotion and protec - tion of investments. However, these treaties have been terminated in recent years, and India is currently in the process of negotiating fresh treaties with various countries.
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