There is no denying that countries with bountiful natural resources in terms of mineral reserves have better prospects of accelerated economic development. Indian mining industry too, is one of the core sectors of the economy as it provides raw materials to important industries such as power, steel and cement.
India is well endowed with mineral resources owing to a varied geological structure and mining history dating back to pre-historic days. India produces as many as 95 minerals, which includes four fuel, 10 metallic, 23 non-metallic, three atomic and 55 minor minerals (including building and other materials). The country is also the largest producer of sheet mica, third largest producer of steel and coal, fourth largest producer of iron ore and is blessed with world’s fifth largest bauxite reserves.
For an emerging economy like ours, which is expected to grow by approximately 7-8% in the years to come, factors such as urbanisation, infrastructure development, automotive production and demand for consumer durables emerge as major determinants of the burgeoning demand for metals and minerals. As per industry estimates, every 1% increase in the growth rate of the mining sector results in a 1.2-1.4% increment in expansion of industrial production and a correspondingly rise of 0.3% in the GDP growth rate. Thus, the accelerated growth in this sector can potentially impel the economy by not just creating employment and meeting the ever-growing demand of the downstream industries such as manufacturing and infrastructure but also by leading to increased fiscal contributions to the state and Central government exchequers.
As per industry estimates, a 1% increase in the growth rate of the mining sector results in a 1.2-1.4% increment in expansion of industrial production and
a correspondingly rise of 0.3% in the GDP growth rate.
Over the past few years, the performance of the industry has been quite favourable with GROSS Value Addition (GVA) of the mining and quarrying industry growing at a CAGR of 6.21% between 2011-12 and 2017-18 to reach approximately US$ 58.14 billion in 2017-18. Moreover, mineral production in India has also surged, growing at a CAGR of 5.72% between 2013-14 and 2017-18, to reach approximately US$ 17.62 billion in 2017-18.
Apart from its enormous mineral strength, the country’s untapped mineral reserves speak volumes about its mining potential. With merely 20% of total mineral reserves mined in the country, India has a huge upside opportunity for investors to explore. Since exploration is at the source of value creation in mining industry, FICCI believes that exploration activity in India needs to be increased at a rapid pace to enable this industry to flourish.
FICCI has always been at the forefront in voicing industry’s concerns and has been an active propagator of the idea of ‘Explore in India’ to ‘Mine in India’ to ‘Make in India’. FICCI is an active member of the Committee formed by the Ministry to revisit the National Mineral Policy 2008. The Chamber has made a representation on the subject and given wide-ranging recommendations, including domestic value addition, cluster mining, infrastructure development, expediting exploration and auctioning.
Given the mining sector’s importance to India’s overall economic development, FICCI believes that it is time to accord the utmost importance to mineral development and mining and make it a major contributor to the economy, as is the case in other mineral-rich developed countries such as Australia and Canada. This calls for due emphasis on exploration to augment the reserve base of the country and harness the existing resources through scientific and sustainable mining.
Moreover, for a sustained high growth trajectory in the sector, FICCI recommends that measures need to be taken to hasten the approval processes, create a favourable fiscal regime and provide a conducive administrative and regulatory policy framework for promoting exploration.
The need of the hour is to give due emphasis on exploration to augment the
reserve base of the country and harness the existing resources through
scientific and sustainable mining.
Even though India’s geological domains are well endowed with mineral resources, they are yet to be fully explored, assessed and exploited. In order to give an impetus to exploration activity, the need of the hour is to discover minerals for which India is dependent on imports and identify new strategic minerals for the future as the minerals being used today might become obsolete in future. To ensure long-term mineral security for the nation, initiatives should be taken to boost production of those minerals domestically in which the nation is self-sufficient while for those minerals which are not available in sufficient quantity locally, international assets through acquisitions and joint ventures should be targeted.
In order to contribute to the overall economic growth by leveraging ‘Make in India’ campaign, the government needs to identify the untapped potential in Indian mining equipment sector. Therefore, the government should take proactive initiatives to incentivise investments in the sector and encourage indigenous domestic production of mining equipment and heavy machineries.
FICCI has published an ‘Under 40 Age Group Mining Recommendations Booklet’ which provides useful insights and innovative recommendations to facilitate the growth of Indian mining industry and increase its contribution to India’s GDP and employment. The booklet proposes recommendations under six sub-heads, namely Regulatory Compliance, Societal & Environmental Development, Expediting Exploration, Business Model, Financial Attractiveness and Enabling Supportive Infrastructure.
Through this booklet, FICCI has made various recommendations to address the challenges prevailing in the mining sector which are hindering its growth path. The stakeholders along with the government need to come together and take appropriate and much-needed steps to surmount the challenges the industry is facing today. The synergistic effect that it will generate will propel both Indian mining and economic growth to the next level.
The author is Chair, FICCI National Mining Committee and Managing Director, Essel Mining & Industries Ltd., Business Head, Mining and International Trading Sector Head, Mineral Resources Development, Aditya Birla Group.