In a major step to strengthen India’s mining sector, the Central Government has launched a ₹5,000 crore incentive scheme to reward states and Union Territories with legislatures for implementing mining reforms, operationalising mines, and increasing mineral production during FY 2026–27.
The scheme has been introduced under the Scheme for Special Assistance to States for Capital Investment (SASCI) for FY27. The Ministry of Mines will act as the nodal ministry and has already issued operational guidelines.
The initiative follows the success of a similar scheme launched in the previous financial year and is aimed at improving governance, increasing mineral output, and boosting state revenue from mining activities.
Key Objectives of the Scheme
The scheme is designed to:
- Speed up mine operationalisation
- Increase mineral production
- Improve ease of doing business in mining
- Strengthen governance and transparency
- Boost revenue generation for states
Under the scheme, an individual state can receive incentives of up to ₹550 crore under different components.
Three Major Components of the Scheme
1. Reward for Mining Reforms
States can receive ₹100 crore if they complete five important mining reforms by December 15, 2026.
These reforms include:
- Integration with the Unified Mining Portal
- Formation of a Pre-Auction Committee
- Constitution of a State-Level Coordination Committee
- Publication of an Annual Auction Calendar for major minerals
- Adoption of technology-based systems to prevent or detect grade misclassification of mineral ore
This component aims to bring more transparency and efficiency to the sector.
2. Incentive for Mine Operationalisation
This part focuses on speeding up the auction and operationalisation of mining blocks.
Pre-Embedded Clearances
States will receive ₹20 crore per major mineral block auctioned with pre-embedded clearances such as:
- Forest clearance
- Environmental clearance
- Land approvals
This incentive is available for blocks auctioned during FY27 up to December 31, 2026, subject to a maximum limit of ₹200 crore per state.
Production Start Incentive
States can also receive ₹250 crore if they operationalise at least 10% of the major mineral blocks auctioned till March 31, 2026, by ensuring production and dispatch begin before December 31, 2026.
This is expected to reduce delays and bring mines into production faster.
3. Performance-Based Reward under SMRI
The third component is linked to the State Mining Readiness Index (SMRI) 2026–27.
States will be ranked in three categories, and the top three states in each category will receive:
- 1st Rank: ₹100 crore
- 2nd Rank: ₹75 crore
- 3rd Rank: ₹50 crore
This will encourage healthy competition among states in improving mining governance and readiness.
Why This Scheme Matters
India is rich in mineral resources, but delays in clearances and operationalisation often slow down production. By rewarding reforms and faster implementation, the Centre aims to unlock mining potential, attract investment, and support industrial growth.
The scheme is also expected to improve the availability of critical and major minerals needed for sectors like:
- Infrastructure
- Manufacturing
- Energy
- Defence
- Electric Vehicles (EVs)
This move reflects the government’s focus on making the mining sector more efficient, transparent, and investment-friendly.