Ministry of Mines Rolls Out ₹5,000 Crore Incentive Scheme to Accelerate Sectoral Transformation

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Dated: 18.06.2025

Ministry of Mines Rolls Out ₹5,000 Crore Incentive Scheme to Accelerate Sectoral Transformation

The Ministry of Mines has officially released the operational guidelines for Part-V: Mining Sector Reforms under the flagship initiative Scheme for Special Assistance to States for Capital Investment 2025-26 (SASCI 2025-26). This progressive scheme introduces a performance-based incentive structure to reward states undertaking substantial reforms in the mining sector—covering both major and minor minerals.

With a total budgetary outlay of ₹5,000 crore, the mining reform component of SASCI 2025-26 is poised to enhance transparency, efficiency, and sustainability in India’s mining ecosystem, while simultaneously boosting state revenues and industrial development.

Key Features and Objectives

The initiative aligns with India’s vision to:

Promote mineral sector development through institutional and procedural reforms,
Encourage the operationalization of auctioned blocks,
Incentivize adoption of best practices including star ratings, mine closure plans, and technological improvements,
Reward high performers through a State Mining Readiness Index (SMRI) framework.

The scheme is divided into three components:

Component I: Minor Mineral Sector Reforms – ₹2,000 Crore Allocation

This segment aims to encourage states to implement a set of seven specified reforms in the minor mineral sector. States implementing at least four out of these seven reforms will receive ₹100 crore each as incentive, disbursed on a first-come-first-served basis.

The qualifying reforms include:

Adoption of a Minor Mineral Policy,
Establishment of a State Mineral Exploration Trust (SMET),
Implementation of transparent auction systems for granting mineral concessions,
Introduction of a star rating framework for sustainable mining,
Operationalization of a Mine Closure Framework,
State-wide exploration and mapping for at least three minor minerals,
Amendment of District Mineral Foundation (DMF) Rules in alignment with updated PMKKKY guidelines.

Application Deadline: 31st October 2025
Submission Mode: Email to ecos-mines@gov.in along with Annexure-I and supporting documents.

Component II: Operationalization of Major Mineral Blocks – ₹2,100 Crore Allocation

Under this component, states are rewarded for converting auctioned major mineral blocks into operational mines.

Eligibility: States must operationalize at least 10% of major mineral blocks successfully auctioned up to 31st March 2025.

Definition of Operationalization: Commencement of production and dispatch from the mine.

Incentive: ₹300 crore per qualifying state, again on a first-come-first-served basis.

A state-wise list of auctioned blocks and corresponding minimum operational targets will be referenced for evaluation.

Application Deadline: 31st December 2025
Submission Mode: Email using prescribed Annexure-II.

Component III: State Mining Readiness Index (SMRI) – ₹900 Crore Allocation

This component introduces a competitive benchmarking model. States will be ranked under the forthcoming State Mining Readiness Index (SMRI) to assess overall preparedness and performance.

Categories: States will be divided into Category A, B, and C for comparison based on pre-defined parameters in the SMRI.

Incentive: The top 3 states in each category will receive ₹100 crore each.

Conditions:

No imposition of state-level taxes or levies on major minerals beyond central statutes.
Fulfillment of eligibility criteria as per Annexure-III.

Application Deadline: 31st October 2025

Procedure for Proposal Evaluation and Fund Disbursal

Proposals will be scrutinized by a Committee constituted by the Ministry of Mines, and recommendations will be forwarded to the Department of Expenditure, Ministry of Finance, for final approval and fund release.

Important Note: The released funds must be exclusively utilized for capital investment projects, especially within mining districts, and expenditures must be incurred before 31st March 2026.

Strategic Significance of the Guidelines

These guidelines reflect a strategic shift in governance from input-based allocation to performance-based incentives, thereby encouraging states to adopt innovative, transparent, and citizen-friendly practices in mining governance.

The framework also brings minor minerals into the reform ambit—an area previously less regulated—ensuring end-to-end improvement in the entire mineral value chain.

Conclusion

The SASCI 2025-26 Mining Reform incentives offer a clear roadmap for states to modernize their mineral sectors, improve governance, and deliver developmental outcomes to local communities. With ₹5,000 crore at stake, states now have both the mandate and motivation to implement meaningful reforms in one of the most crucial sectors driving India’s industrial and economic growth.

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Source: Ministry of Mines

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