On 17th August this year, the President gave assent to the Mines and Minerals (Development and Regulation) Amendment Act, 2026,[1] and with it the Parliament completed what can fairly be called a rescue operation. It was an attempt to claw back ground the Union lost in the Supreme Court's mineral royalty verdict of July 2024. The Bill had cleared both Houses on 13th August, with remarkably little of the sustained public debate that a reordering of Centre-State fiscal power might be expected to provoke. That reminds one of Parkinson's Laws, the Law of Triviality, often called bikeshedding, which holds that "the time spent on any item of the agenda will be in inverse proportion to the sum of money involved."[2] How technical this dispute has been allowed to sound, and how consequential it actually is!
The case the Amendment is aimed at is Mineral Area Development Authority (MADA) v. Steel Authority of India authored by nine judges, the longest-pending Constitution Bench reference in the Court's history, decided on 25 July 2024 by an 8:1 majority headed by then Chief Justice D.Y. Chandrachud.[3] The Bench held that royalty payable under the MMDR Act, 1957, is not a tax but a contractual payment for the right to extract minerals, and that States retain the legislative competence, under Entry 50 of the State List, to tax mineral rights, though the Union has competence over Mines under Entry 54 of the Union List[4].
In so holding, the majority overruled India Cement v. State of Tamil Nadu (1989),[5] which had held for thirty-five years that a cess on royalty was beyond State power. Justice B.V. Nagarathna dissented, and dissented forcefully, warning that unshackling States to tax mineral rights independently would trigger a "race to the bottom in a nationally sensitive market"[6] — inter-State competition for revenue that could distort investment and, ultimately, hurt the very States it seemed to empower. This rationale is perhaps sound macroeconomics, though to be fair, the learned judge's dissent was more substantive still.
The Union tried, and failed, twice to soften the blow through the ordinary channels. A plea to confine the ruling's effect prospectively was rejected within weeks, in August 2024; the Court instead allowed States to recover dues going back to 1 April 2005, staggered over twelve annual instalments from April 2026, with interest and penalty waived for the pre-judgment period. A review petition met the same fate in October 2024. Only then, in November last year, did the Centre reach for a curative petition, filed on the footing that the verdict contained "errors apparent on the face of the record" with grave macroeconomic consequences.[7] That petition remains pending. Chief Justice Surya Kant has spoken of convening a fresh nine-judge Bench as early as January 2026 to hear it, but as of this writing, no such Bench has ruled.
It is against this backdrop that the MMDR Amendment deserves to be read: not as stand-alone fiscal housekeeping, but as a second front opened by the Government, while the judicial one is still live. Principally, the Act does two things. First, it enlarges the Union's regulatory footprint from "mines" to "mineral-bearing land" itself, inserting a fresh definition into Section 3. Second, and more consequentially, it inserts a new Section 9D, under which States are barred from levying any tax, cess or other imposition on mineral rights or mineral-bearing land except within conditions the Central Government chooses to prescribe. Dues that States have not yet collected stand extinguished; sums already collected are shielded from any claim for refund. It is, in substance, a one-way valve — the Union keeps what has flowed to it under the old dispensation and forecloses what has not yet flowed to the States under the new one, bordering on deprivation of vested rights.
One wonders if this Amendment can survive close legal scrutiny; more importantly, is it sound policy quite apart from its legal fate? Parliament does have a textual hook: Entry 50 of the State List is itself qualified: States may tax mineral rights "subject to any limitations imposed by Parliament by law relating to mineral development."[8] The Court in MADA said as much, and this is not a case of Parliament reaching for a power the Constitution withholds from it altogether.
The disempowerment lies one layer deeper. What the nine judges actually decided is the federal architecture housed in Articles 245 and 246 read with Entries 49, 50 and 54 of the Seventh Schedule. The Bench was explicit that this division of legislative power is, in its words, "an emanation of the federal project," and that Parliament cannot ordinarily entrench upon a State's plenary field except where the Constitution itself permits it to. Though the proviso to Entry 50 permits Parliament to impose limitations, it does not empower it to extinguish the underlying power altogether. Further, such an amending law needs to be for "mineral development," – the state may make out a plausible case that it is.
A limitation presupposes the power survives the narrowing. But Section 9D, by making the exercise of States' taxing competence wholly contingent on Central permission and by nullifying accrued-but uncollected dues outright; this reads less like a limitation and more like a repeal in substance, dressed in condescending vocabulary.
There is a second, independent difficulty. Courts have long recognised that a legislature may validly alter the basis of a judicial decision but it may not simply annul the operative effect of a judgment by ordinary statute while leaving its constitutional foundation untouched commencing from Madan Mohan Pathak:[9] Section 9D's retrospective nullification of dues that MADA itself declared recoverable, on a timetable the Court itself fixed in twelve annual instalments from April 2026, sits uneasily with that principle. It does not change the constitutional basis on which the Court found States competent to tax; it simply overrides the consequence.
Section 9D goes beyond a permissible "limitation" and functions, in substance, as a repeal is a reading of unamended constitutional text against an unusually generous proviso — reasonable jurists could differ, and the Union's counsel will certainly argue that any statute short of an outright ouster of State competence remains a "limitation," however severe in effect. In the absence of an amendment to Articles 245, 246 or the Seventh Schedule that would be difficult argument to pass muster.
None of this is to dismiss the Centre's underlying grievance as baseless. Some States have imposed levies on mineral-bearing land running up to 20 per cent,[10] and the cocktail of royalty, District Mineral Foundation contributions, auction premiums, GST and now potentially unbounded State cesses genuinely does complicate investment planning for public-sector miners and downstream industries in steel, power, cement and aluminium alike. Justice Nagarathna's dissent supplies real ballast for the uniformity argument. In fact, Sarthak Pradhan and Shobankita Reddy have called for constitution of a Minerals Council on the lines of the GST Council to hammer out such issues with the States in the interest of mineral development[11]. What the 2026 Amendment has done is attempt to reconstitute the fiscal federalism the Court found embedded in the Constitutional scheme.
The likeliest consequence is more litigation, not less. Mineral-rich States — Odisha, Jharkhand, Chhattisgarh, Karnataka and West Bengal chief among them — have every incentive to challenge Section 9D before the same Court whose verdict it was designed to defeat, and the pending curative petition adds an unusual wrinkle: the Union is, in effect, arguing its case twice, once in the courtroom and once in the Gazette, without waiting to see which forum agrees with it.
The Union appears to have discounted a further cost of this course: courtroom battles between itself and the States divert capital and official attention from mineral development at precisely the moment both are needed most. The reference that produced MADA itself took thirteen years, 2011 to 2024, to resolve; through that period, multiple High Courts stayed tax demands and barred coercive recovery pending its outcome, and more than eighty connected matters queued up behind it. Litigation of that duration is not a neutral backdrop against which mining investment proceeds unaffected. It is priced in, through higher discount rates and deferred financial close, by lenders and equity partners who underwrite projects against a fiscal regime expected to hold for fifteen to thirty years. Section 9D, by inviting a fresh round of writ challenges rather than closing the one just concluded, threatens to reopen exactly that clock.
This matters well beyond Raipur and Ranchi. India has, over the past five years, built a critical-minerals architecture that leans heavily on the promise of a stable domestic mining sector: the Australia-India Economic Cooperation and Trade Agreement,[12] which opened tariff-free access to Australian lithium, cobalt and rare earths from December 2022; the India-Chile Comprehensive Economic Partnership Agreement,[13] signed in May 2025 with a dedicated critical-minerals cooperation track; and India's accession to the Minerals Security Partnership in 2023,[14] whose members explicitly frame cooperation around "trusted" and "resilient" supply chains. This is language that presupposes a partner whose regulatory foundations are settled, not litigated for the second time in three years. Each depends, for its practical effect, on India's capacity to mine and process minerals domestically at the scale its trade partners, and its own National Critical Mineral Mission, now assume, but a capacity that a decade and a half of unresolved fiscal contestation does not help build.
Great mining nations are built on settled ground, not on relitigated ground. India cannot keep asking the world to trust a foundation its own federalism has not finished laying. Surely a case of undermining, not just the law!
Mines and Minerals (Development and Regulation) Amendment Act, 2026, s. 1(2) (Presidential assent received 17 August 2026). ↑
C. Northcote Parkinson, 'Parkinson's Law', The Economist, 19 November 1955; expanded in Parkinson's Law and Other Studies in Administration (Houghton Mifflin, 1957) — the passage quoted is his statement of the corollary 'Law of Triviality'. ↑
Mineral Area Development Authority v. Steel Authority of India, 2024 INSC 554 (Supreme Court of India, nine-Judge Bench, 25 July 2024) (MADA). ↑
Entry 54; Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest. ↑
India Cement Ltd. v. State of Tamil Nadu, (1990) 1 SCC 12. ↑
MADA (n 2), per Nagarathna J. (dissenting). ↑
'Centre files curative plea against SC ruling on states' power to tax mines', Business Standard, 27 November 2025. ↑
Constitution of India, Seventh Schedule, List II (State List), Entry 50. ↑
Madan Mohan Pathak v. Union of India, (1978) 2 SCC 50; AIR 1978 SC 803. ↑
PRS Legislative Research, The Mines and Minerals (Development and Regulation) Amendment Bill, 2026 — Bill Summary (August 2026). ↑
Excess levies are choking India's mining industry. It needs a GST-style Minerals Council – The Print, 2nd September ↑
Australia-India Economic Cooperation and Trade Agreement, done 2 April 2022, entered into force 29 December 2022. See author's article on ECTA at https://www.livelaw.in/articles/india-australia-economic-cooperation-and-trade-agreement-dispute-settlement-architecture-mediation-536842 ↑
India-Chile Comprehensive Economic Partnership Agreement, signed 8 May 2025. ↑
India acceded to the Minerals Security Partnership in June 2023. ↑
Author is a Senior Advocate practicing at Madras High Court & Supreme Court and an International Trade & Energy Law Consultant. Views are personal.