The Federation of Indian Chambers of Commerce & Industry (FICCI) has expressed concerns on the proposed new Mines and Minerals Development and Regulation Act (MMDR), which if implemented, would make the Indian mining industry uncompetitive globally with the proposed tax hike and making the country's mining sector the highest taxed in the world.
In a presentation made to Prime Minister Manmohan Singh on the draft MMDR Act, FICCI representatives raised concerns over the royalty and profit-sharing proposals of the new mining Bill 2011, where coal miners will have to share 26 per cent of their profits with the project affected people through a 'district minerals development fund' and non-coal miners will have to pay an amount equal to 100 per cent of royalties with project affected people.
"This means that the taxation rates in the mining industry in India would perhaps be the highest in the world. Such exorbitant levels of taxation would render the mining industry highly uncompetitive globally," FICCI said in its representation to the Prime Minister.
"Indian mining sector is already one of the highly taxed sectors globally, with an estimated effective tax rate of around 43 percent for iron ore, as compared to 35-40 percent for most of the major mining countries like Brazil, South Africa, Australia, Canada," FICCI mining committee chairman Tuhin Mukherjee said.
"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 added.
FICCI is pressing for changes in the proposed law and said that tax rate on coal will increase to over 61 per cent, after the Bill comes into force of the new mining law from the current level of 47.7 per cent.