In a departure from the arbitrary way of non-coal mines allocation, a transparent auction process is set to start in the country bringing a lot of opportunity for the SME sector. Apart from value-addition of major minerals, the SME sector can also look forward to bidding for minor minerals.
While value-addition and providing auxiliary services make a huge business sense since miners of major minerals often rely on third-party outsourcing for jobs that also includes transportation; successfully bidding for minor minerals might turn a SME into a major entity in the foreseeable future.
Mines Secretary Balvinder Kumar also endorsed the view. He told SMEpost, “basically, the SME sector investment in the mining sector would come for minor minerals. We feel once the mines for major minerals are auctioned and made operational, a lot many other industries in the SME sector would come up for value addition and downstream industries. They have a huge role to play, certainly.”
India has the same geological strata as that of Australia and thus is likely to have a similarly large geological potential. However, India’s mining sector has traditionally been small and has been growing slower than other mining jurisdictions such as China, Brazil and Australia. The real value add of India’s mining sector to the GDP is very low at USD 14.4 billion against that of USD 150 billion in China, USD 21 billion in Brazil and USD 38 billion in Australia.
The Narendra Modi government has touched upon the right cord to take initiative for bringing the sector on the right track. The amendment of the MMDR Act paving the way for auctioning of the mines was a landmark decision which would not only clear the dirt that was very much an integral part of the sector, it would also help in instilling the faith of the investors on the sector. SMEs can rely on the business for long.
According to Kumar, six states — Karnataka, Chhattisgarh, Rajasthan, Maharshtra, Jharkhand and Gujarat – have already come out with the Notice Inviting Tenders (NITs) in respect of 31 blocks of major minerals for putting them on auction. NITs for another 19 mines are also expected to be issued before the end of the year. In additions, another 15 mines would be put on auction in January or by the middle of February.
A new set of rules from the states are also going to come soon for minor minerals, which is a state subject. The Centre has already asked the states to form rules for minor minerals on the pattern of what it did for the major minerals. States have either put draft rules for public comment or notified in allocation of minor minerals.
Image Courtesy : The Hindu
