MMDR proposal to make India most taxed nation in mines sector: FICCI

Industry bodyFICCI today said the imposition of additional burden on the mining and mineral sector under the proposedMines and Minerals (Development and Regulation) Act would lead India to become the highest taxed country in the sector. 

"Indian mining sector is already one of the highly taxed sector globally, with an estimated effective tax rate of around 43 per cent for iron ore, as compared to 35-40 per cent for most of the major mining countries like Brazil, South Africa, Australia, Canada,"FICCI Mining Committee's Chairman Tuhin Mukherjee said. 

In Australia tax on mining currently stands at 39 per cent, in Brazil 35 per cent, in Chile 28 per cent, in Russia 35 per cent and in China, it is 32 per cent. 

"In India, the effective tax rate will rise to over 60 per cent in case of coal and 55 per cent in case of iron ore after these new provisions are implemented," Mukherjee said. 

A ministerial panel on mine, headed by Finance Minister Pranab Mukherjee, had on first week of July approved the draft Bill obligating coal miners to share 26 per cent profit and non-coal miners 100 per cent royalty with project-affected people. 

Anand Goel, Joint Managing Director,Jindal Steel and Power and a member of the Committee, said that the impact of 26 per cent profit sharing for coal and 100 per cent royalty sharing with the project affected people for non-coal miners, as proposed in the draft Bill, would amount to Rs 15,000 crore annual payment for the mining firms. 

"It will create super rich pockets in the mining areas leading to a huge disparity and dissatisfaction among the rest," Goel said, adding that people from other parts of the country would start migrating to the mine-rich areas. 

Sesa Goa Managing Director and Co-Chairman of the Committee P K Mukherjee said that the move might not encourage foreign direct investment to come in the sector, which has not seen much flow since the opening up of the sector in the last decade.