It is felt that India has not been able to attract significant private sector investment in exploration despite introduction of a National Mineral policy (in 1993) and amendments to the Mines & Minerals (Development and Regulation) Act, 1957, primarily because of lack of lack of resources with public sector agencies like GSI, MECL and other state and central agencies for undertaking promotional exploration for non-fuel minerals.

The key reasons for limited private investment in mineral exploration and development, as highlighted in the Report of the High Level Committee on National Mineral Policy, were security of tenure, lack of clarity on transfer of mining rights, lack of clear guidelines for mine allocation leading to disputes/litigation, procedural delays and slow decision-making.

The study has also called for improvement in the fiscal regime for exploration through a tax regime that allows for flexibility in expenses deduction. It is felt that instruments like ‘flow-through shares’ that are used in Canada could also be considered. These allow transfer of tax deductions from exploration companies to their individual investors making investments in exploration companies an attractive option.

In respect of iron ore, whose demand is expected to shoot up with the accelerated GDP growth in India, it is stated that there was a need to clearly understand the ‘desirable economic scenario’ (in terms of balance between consumption, export and import across products and time), and also the economic policy and instruments directed towards the said scenario.