India needs to adopt revenue sharing model in the mining of natural resources, Vedanta Ltd.'s Chairman Anil Agarwal said on Wednesday.
The government needs to respect explorers and introduce a revenue sharing model and provide facilities that encourage private firms to mine resources they have found, he told BloombergQuint in an interview. That would mean moving away from the current “khichdi system” of auctioning, he said.
The global standard, Agarwal said, is companies discovering resources mine them for the government in exchange for 25 percent revenue.
“I have said this time and again. There are two types of countries in the world. One—socialist—where the government is the owner of businesses,” he said. “Second—democratic—where entrepreneurs run businesses and the government becomes a regulator. They spend their energy in developing the country's infrastructure. That model needs to be implemented in India.”
Vedanta is the world's largest integrated zinc-lead producer and among India's larger private oil and gas explorers. It produces everything from gas, aluminium and commercial power.
Another big constraint for the sector is forest clearance, Agarwal said. He said when it comes to taxation, income tax, sales tax and excise duty are based on self clearance that are later assessed by regulators. However, in the case of natural resources every new factory has to get clearance before it can be set it up, which takes around two years.
“You have to start trusting people and (impose) heavy penalty if they don't follow,” he said.
Watch | Vedanta's Anil Agarwal On The State Of The Indian Economy
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