Bangalore: Karnataka has opposed a key recommendation made by the Anwarul Hooda panel that drafted the new national mineral policy to empower the Union Government to overrule State Governments and grant mining rights to individual firms in cases of delay.

In its comments sent to the Centre on the draft policy, Karnataka has said that the Union Government should initiate action on awarding mining lease to firms only after receiving the recommendation from the State Government.

The committee headed by Anwarul Hooda, Member, Planning Commission, suggested that the Union Government should be vested with appropriate powers to hand over mining rights to firms by overruling the State Governments in cases of delay.

According to officials, mineral-rich states including Karnataka, Orissa, Jharkhand, Arunachal Pradesh and Uttaranchal have opposed this recommendation when the draft was circulated for comments.

Karnataka has also opposed export of higher grade iron ore, arguing that both the State and the Union Governments would benefit from higher tax revenue if it was used by value-added industries locally.

Being one of the largest iron-ore producing States in the country with production in excess of 35 million tonnes an annum, Karnataka has strongly favoured moving away from the present system of collecting royalty on iron ore on a per tonne basis to an ad-valorem basis as suggested by the Hooda committee to augment revenue from the commodity.

The State now earns a royalty of around Rs. 165 crore an annum from iron ore, that varies from Rs. 11 a tonne to Rs. 27 a tonne depending on the composition of ore. The Hooda panel reckons that adopting the ad-valorem duty structure for collecting royalty on iron ore would increase the State's revenue by almost five times.

Ad-valorem is a duty that is graded according to the cost or market value of the article taxed while a specific duty is a duty of a specific sum assessed on an article without reference to its value or market. The Hooda committee has also recommended imposition of export duty on iron ore in lump form with iron content above 65 per cent. At present, export of higher grade iron ore (with iron content above 64 per cent) is channelised through Minerals and Metals Trading Corporation. The committee has recommended that the existing regime of export licensing be scrapped.

Steel plants

To create a level-playing field between steel plants with and without captive mines, the panel has suggested that steel plants that do not have captive mines should be given preferential treatment in allocation of iron ore mines. Such steel plants would not have to go through the auction procedures.

The Hooda panel has favoured relaxing rules for granting of permits for surveying and prospecting. It said that each State should allocate mineral development funds to help develop infrastructure.

The Federation of Indian Mineral Industries said the recommendations would cut the time needed for Government clearances and spur investment by foreign firms.

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