The Mines and Minerals Amendment Bill, 2026, could trigger a re-rating of large metal and mining stocks by reducing the risk of fresh state levies and retrospective tax demands, analysts said.
The legislation, cleared by the Lok Sabha on Aug. 12 and by the Rajya Sabha on Aug. 13, restricts states from imposing new taxes, cesses or other charges on mineral rights unless the Centre first sets the conditions. It also invalidates certain unpaid or pending state levies, removing an overhang that has weighed on mining companies since the Supreme Court's rulings on state taxation powers in 2024.
The changes could benefit companies with large mining operations, including NMDC, Coal India, Tata Steel and Steel Authority of India Ltd. Analysts are also watching the implications for JSW Steel, Jindal Steel and Hindalco Industries.
The Bill could improve regulatory certainty and make mining costs easier to assess. But the scale of the benefit will depend on the rules issued by the Centre and the treatment of pending state-level tax proposals.
"This Bill will be a positive development for domestic mining and metal companies. It could improve regulatory certainty and reduce the overhang from state-level mineral taxes," said Netra Deshpande, research analyst at Mirae Asset Sharekhan.
Tax Overhang
The legislation follows a series of Supreme Court rulings that widened concerns over retrospective tax liabilities.
In 2024, the Supreme Court affirmed the power of states to tax mineral rights in addition to royalty. A subsequent order in August 2024 allowed states to impose or renew such taxes retrospectively from April 1, 2005.
The court allowed companies to pay the resulting dues in instalments over 12 years beginning April 1, 2026. It waived interest and penalties for the period before July 25, 2024.
NMDC could emerge as one of the larger beneficiaries because the company has disclosed the scale of its potential exposure. It reported a possible liability of Rs 15,785.72 crore linked to Karnataka's proposed retrospective tax on mineral rights and mineral-bearing land.
The Karnataka legislation remains pending presidential assent.
Deshpande said the benefit for NMDC would ultimately depend on how the amended provisions are implemented.
Nomura identified Tata Steel, NMDC and Coal India as among the companies with the greatest exposure to potential liabilities. Jindal Steel has lower exposure because most of its mine acquisitions came after FY18, the Japanese brokerage said.
All four companies could benefit from the changes, according to Nomura. The brokerage has "buy" ratings on Tata Steel, JSW Steel and Jindal Steel and expects the Bill to improve regulatory certainty and cost predictability.
"The extent of the benefit will depend on the rules the Centre notifies," Nomura said.
JP Morgan and Emkay Global have also published recent views on Tata Steel, NMDC, Coal India and Hindalco. JP Morgan remains cautious on NMDC and Coal India while maintaining a positive view on Tata Steel and JSW Steel. Emkay has "buy" ratings on Tata Steel and an "add" rating on Coal India.
Several analysts said domestic and international brokerages were reviewing their assumptions for companies that could benefit from the change in the tax framework.
Mining Revenue
Coal India could also benefit through its subsidiaries, Central Coalfields and Bharat Coking Coal, from the invalidation of unpaid mineral cess in Jharkhand. Tata Steel and SAIL could see gains because of their large captive mining operations in the state.
The amendment has drawn opposition from some state governments.
Jharkhand Chief Minister Hemant Soren has written to the President and the prime minister seeking a reconsideration of the Bill. He warned that the changes could affect the finances of mineral-rich states.
Kerala has said it will challenge the amendment politically and legally, arguing that it weakens states' constitutional and fiscal powers.
The Ministry of Mines has said the legislation will create a more predictable fiscal framework while preserving states' share of mining revenue.
Mining states collected more than Rs 5 lakh crore between FY16 and FY26, compared with Rs 82,000 crore collected by the Centre, according to the ministry. It said this revenue distribution would remain unchanged.
States also collected more than Rs 96,000 crore in auction premiums between FY21 and FY26, a revenue stream the ministry said would remain unaffected.
Coal India also sought to address concerns over the impact on state finances. In a post on X, the company said states would continue to receive about 90% of mining-sector revenue "before the MMDR Amendment Bill 2026 or after," adding: "No dilution, no reduction, no surprises."
The company also said nearly 50 minor minerals, including sand, gravel, boulders and murram, would remain under the control of state governments and would not be affected by the amendment.
Critical Minerals
The Bill also allows lease holders to add strategic minerals, including lithium, graphite, nickel, cobalt, gold and silver, to existing leases without additional cost.
Analysts expect this provision to support investment in critical minerals needed for India's energy transition and manufacturing plans.
The Centre has separately allocated Rs 32,000 crore for the National Critical Mineral Mission and identified 24 critical minerals for domestic exploration.
The government has linked the changes to India's mineral import bill, which stood at Rs 10.12 lakh crore in FY26.
Mining companies currently face several charges beyond royalty, including auction premiums, dead rent, District Mineral Foundation contributions, GST and transit fees.
The constitutional position remains an area of scrutiny. Parliament appears to have a stronger basis for restricting taxes on mineral rights under Entry 50 of the State List. Its authority to limit taxes on mineral-bearing land under Entry 49 is less settled, a distinction drawn by the Supreme Court in its 2024 judgment.
The amendment could strengthen the economics of captive mining by reducing the risk of sudden tax-related outgo and giving companies greater clarity before committing capital to expansion.
For companies that have operated under the threat of retrospective tax demands for the past two years, the Bill could mark a change in the regulatory framework. But the market's assessment of the gains will depend on the Centre's rules and notifications, as well as the eventual treatment of pending state-level legislation.
Nomura said the amendment was positive because it could improve regulatory certainty, make costs more predictable and potentially limit additional levies. The brokerage added that the final benefit would depend on how the Centre frames and implements the rules.
Markets will now watch those notifications closely and assess how pending state-level tax proposals are brought in line with the new framework.
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