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Criticising the Government's proposed move on mandatory profit sharing, the mining industry said the proposed Bill will not help attract investments into the sector.
“The tax burden will make the mining industry unviable,” said Mr R.K. Sharma, Secretary-General, Federation of Indian Mineral Industries. “It won't help attract any technology or investments,” Mr Sharma said.
Industry chambers have also flayed the Government's move.
The royalty proposal will lead to an annual revenue loss of Rs 6,000 crore to the Government, said Mr D.S. Rawat, Secretary-General, Associated Chambers of Commerce and Industry (Assocham).
Besides, the valuation loss of public sector companies such as CIL, MOIL, SAIL, MNDC, Nalco and others could be Rs 75,000 crore.
Similarly, the valuation loss of private companies such as Hindalco, Balco, Sesa Goa, JSW Steel and others is estimated at Rs 25,000 crore, Mr Rawat added.
The impact of this proposal was analysed by FICCI Mining Committee and it was found that the proposed mandatory contribution would raise the incidence of taxation on mining industry significantly from current 47.7 per cent in case of coal to over 61 per cent. In case of iron ore, the tax incidence would rise from 43 per cent to 55 per cent; and in case of bauxite, it would be exorbitant 110 per cent from 55 per cent.
As the industry passes on additional burden to consumers, the prices of power, steel and other commodities will increase and also fuel inflation. An annual payment of Rs 15,000 crore (outgo on account of the MMDR Act) is proposed to be used exclusively for a small number of affected persons, Assocham said.
This will create pockets of super rich in mining areas, leading to huge disparity.
However, the SAIL Chairman, Mr C.S. Verma, appreciated the Government's efforts towards creating a substantial corpus which will go a long way in developing the mining belts.
“This should also facilitate expeditious statutory clearances with the local populace expected to be a more willing partner in the growth of the mineral resources,” Mr Verma said.
SAIL supports the focus on sustainable and scientific mining brought about in the Bill which has been the thrust areas for SAIL too, Mr Verma added.
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