Mining, money & federalism: Why a new law is at the centre of a political tussle in Odisha

Background

The Mines and Minerals (Development and Regulation) Amendment Act, 2026 has triggered a political and federalism-related dispute in Odisha, where mining is central to state revenues and the wider economy.
The amendment seeks to establish a more uniform framework for major minerals and restrict the ability of State governments to impose taxes on mineral rights and mineral-bearing lands.
Former Odisha Chief Minister Naveen Patnaik criticised the law as detrimental to Odisha, while the Centre and Odisha’s ruling BJP government have defended it as necessary to prevent excessive and fragmented levies on mining.

Mineral rights.
Mineral-bearing lands.
Taxes based on mineral quantity, mineral value, royalty payable or other parameters.

State taxation in this area will now be subject to conditions or restrictions prescribed by the Central Government.
Amendments to Sections 2 and 13 further expand the Centre’s role over mineral-bearing lands and give it greater authority to frame rules governing State taxation.
The amendment therefore substantially limits the fiscal space available to mineral-rich States.

In July 2024, a nine-judge Constitution Bench of the Supreme Court, by an 8:1 majority, held that States possess the power to tax mineral rights and mineral-bearing lands.
The judgment distinguished the power to levy taxes from the Centre’s power to regulate mining under the MMDR Act.
For mineral-rich States such as Odisha, the ruling opened the possibility of substantial additional revenues, including claims of around ₹1 lakh crore in arrears and approximately ₹12,000 crore annually.
The 2026 amendment effectively seeks to override the financial consequences of this judgment through parliamentary legislation.

Issue	Significance
Fiscal federalism	Restricting State taxation powers may reduce the fiscal autonomy of mineral-rich States.
Centre–State relations	Greater Central control over mineral-bearing lands raises concerns regarding the constitutional distribution of powers.
State revenue	Odisha argues that the amendment could result in significant loss of potential revenue.
Mining governance	The Centre argues that multiple State-level levies can increase costs and adversely affect investment and the industrial ecosystem.
Political dimension	Opposition parties have framed the amendment as an attack on State financial rights and federalism.

The MMDR Act, 1957 is the principal legislation governing the development and regulation of mines and minerals in India; it enables the Union to exercise control over mining and mineral development within the statutory framework.
The 2015 amendment introduced competitive auctions for major mineral concessions, created District Mineral Foundations (DMFs) and the National Mineral Exploration Trust (NMET), and strengthened measures against illegal mining.
Odisha’s experience highlights the need to balance:

Karnataka, Kerala and Telangana have challenged the 2026 amendment before the Supreme Court, while Odisha Congress has also announced plans to challenge it.
The larger constitutional question is whether Parliament can restructure the fiscal consequences of a Supreme Court interpretation while preserving the federal balance envisaged by the Constitution.