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Industry body Ficci has sought subsuming all levies like royalty and contributions to the District Mineral Foundation (DMF) into one tax like GST to reduce the tax burden on the mining industry. The industry body argued that the mining sector is going through a tough time due to falling commodity prices and demand contraction. Underlining multiple challenges coupled with disruptions due to coronavirus lockdown, Ficci has also sought deferment of royalty and contributions to DMF and the National Mineral Exploration Trust (NMET) by six months.
"Under such challenging times, when commodity prices are freely falling and demand is contracting, most of the miners are struggling to remain profitable or even survive," the industry body said. It recommended "subsuming of all levies like royalty, DMF, NMET, etc into one tax like GST". The DMF has been created in each district under the provisions of Mines and Minerals (Development and Regulation) (MMDR) Amendment Act, 2015 and falls under the purview of the Ministry of Mines.
DMFs are funded by statutory contributions from holders of mining leases. The objective of NMET is to use the funds accrued to the Trust for the purposes of regional and detailed exploration in such manner prescribed by the Centre. Ficci added that the problem of high royalty is aggravated by imposition of DMF charge which is levied at 30 per cent of royalty (for leases granted before January 12, 2015 or 10 per cent for leases granted on or after January 12, 2015). Further, a contribution of two per cent of royalty to National Mineral Exploration Trust (NMET) is levied. With the mining sector grappling with challenges in view of the countrywide lockdown, Ficci urged the government for deferment of royalty, and payments to DMF and NMET by six months till the economic situation stabilises.
The industry body also recommended smooth operations of ports and inter-state movement of raw material and goods for the mining sector which has been allowed to operate amidst the lockdown. The industry is facing difficulties in movement by roadways. Since subdued demand is a major area of concern for the minerals and metals sector, Ficci also requested the government to push the economy by announcing special packages for the sector. Since these sectors have significant multiplier effect on both GDP and industrial production, the fiscal stimulus would provide much needed relief to revive the growth in the sector, post lockdown. Stating that the sector has witnessed sudden production halt on account of COVID-19, it called for waiving minimum production requirement under mine development and production agreement for FY'20 and FY'21.
While applauding the mines ministry for taking proactive initiatives to ensure continuity of operations, Ficci said that despite the directives, mineral production has been able to resume only partially in various districts, leading to drastic fall in production. To address the challenge of low production levels, it suggested that the government may provide exports incentives to the industry, similar to China, through initiatives like target plus scheme, wherein major exporters with minimum export turnover will be rewarded.
Ficci also requested the government to facilitate the movement of migrant workers from their native places to plants by providing special sanitised wagons and financial support to the workers for commuting. The industry body has recommended that post the lockdown, it is imperative for the government to provide a level-playing field to domestic players. "As the sector is grappling with the challenges of no/limited production owing to lockdown of operations, the suggested policy interventions would help the industry to revive back soon once the situation improves, resulting in enhanced contribution to mineral production, employment opportunities and to overall economy as well as the GDP," the industry body said