In a set of recommendations to the government, industry body FICCI has sought deferment of royalty, DMF (district mineral fund) and NMET (National mineral exploration trust) by six months till the economic situation stabilises to help mining sector tide over the current crisis where commodity prices are freely falling and demand is contracting.
Asserting that taxation on the Indian mining sector is one of the highest in the world, constituting a substantial part of the cost structure for the industry, FICCI said that the problem of high royalty is aggravated by the imposition of DMF charge which is levied at 30 per cent royalty (for leases granted before January 12, 2015) or 10 per cent (for leases granted on or after January 12, 2015). Further, a contribution of 2 per cent of royalty to National Mineral Exploration Trust (NMET) is levied.
It has thus recommended that all levies like royalty, DMF, NMET etc. be subsumed into one tax like GST to reduce taxation burden on the industry.
The industry body has also recommended the Central government to ensure smooth operations of ports and interstate movement of raw material & goods for the mining sector which has been allowed to operate amidst the lockdown.
The industry is grappling with challenges in movement by roadways. In addition to this, since there is a delay in clearing of cargos by companies due to lockdown, charges like container detention & demurrage charges, ground rent by custodians, that is, CFS, Shipping Lines charges etc. should be waived till end of May 2020 to reduce the financial burden on the industry, it said.
Since the sector has witnessed sudden production halt on account of Covid-19 and subdued demand due to low economic scenario, FICCI has further suggested waiving off minimum production requirement under Mine Development and Production Agreement for financial year 2019-2020 and 2020-2021.
Government has included mining as an essential service to ensure continuity of operations even during the lockdown. Despite this permission, mineral production has been able to resume only partially in various districts, leading to a drastic fall in production.
To address the challenge of low production levels, it has been suggested that the government may provide exports incentives to the industry (similar to China), through initiatives like Target Plus Scheme, wherein major exporters with minimum export turnover will be rewarded through the entitlement of duty credit scrips.
FICCI has requested the government to facilitate the movement of migrant workers from their native places to plants by providing special sanitised wagons and financial support to the workers for commuting.
The industry body has recommended that post the lockdown, it is imperative for the government to provide a level playing field to domestic players. In this context, FICCI recommends that exports of mineral & metal sector should be made cost-competitive by expediting formulation/implementation of RoDTEP Scheme.
Apart from export promotion, FICCI has also requested the government to take protectionist measures to arrest surging imports of minerals & metals into the country after the market improves.