KOLKATA (miningweekly.com) - Indian mining legislation reforms, in the making since 2011, were expected to enter another protracted phase with the government likely to scrap the draft formalised by the previous government and start afresh.

According to senior officials in the Mines Ministry, the ostensible reason for making a fresh start was to make legislative reforms more "mining-industry friendly".

Though not yet officially stated, officials conceded that the bone of contention in the proposed legislative changes was the mandatory sharing of net profits of miners with local communities, which attracted strong flak from the industry, with this provision needing to be revisited.

When the previous government introduced the legislation - the Minerals and Mines (Development and Regulation) Bill of 2011 - it went through several legislative processes but the then government failed to get the final approvals from Parliament, allowing the Bill to lapse on expiry of the term of the last Parliament.

While many of the other lapsed pieces of legislation would be taken up by the new government and placed before the Parliament, the mining legislation needed to be framed from scratch because of several unresolved issues and the declining growth in the sector, the official added.

"The Mines and Minerals (Development and Regulation) Bill of 2011 had many issues but it has lapsed. The government is now taking a view on whether the law should be comprehensively amended or a new Bill be brought altogether," joint secretary in the Mines Ministry Arun Kumar said in a statement.

A final decision on the pending legislation would be taken as soon as Mines Minister Narendra Singh Tomar completed the ongoing meeting with various stakeholders. The process had been expedited against the backdrop of 1.4% negative growth rate registered by the mining industry in 2013/14, the official said.

The government was also holding consultations with various industry stakeholders to consider making the mining industry a 'strategic sector’ as urged by the Confederation of Indian Industry (a domestic industry lobbying body), he added.

Among other changes to mining laws in the country, the draft finalised by several committees of the previous Parliament had proposed that 26% of profits of miners would have to be mandatorily shared with project-affected people but this was subsequently changed to a system whereby royalty payments would be shared with locals.

In the case of non-coal and lignite minerals, miners would have to share with project-affected people funds equivalent to the royalty paid by mining companies to the provincial governments.

Apart from the profit-sharing law, government’s move to set up a National Mining Regulatory Authority and similar bodies at the provincial level, through the legislation, had also been scuttled for now, following the failure to present the Minerals and Mines (Development and Regulation) Bill of 2011 before Parliament.