Overview of Minerals Sector

The metallurgical and mineral industries in India form the fundamentals of its industrial growth and development. India has a vast resource base spread throughout the country, which provides the basic raw materials for most of the industries. India produces a total of 84 minerals comprising 4 fuel, 11 metallic, 49 non-metallic industrial and 20 minor minerals. India has an estimated 85 billion tonnes of mineral reserves remaining to be exploited.

For the past three decades, the Indian mining industry has been progressing at an annual rate of 4 percent to 5 percent. The Indian mining industry currently employs over 1.1 million people.

There are over 2,326 private and 292 public operating mines in India and the minerals and metals from these mines contribute about 16 percent in India’s total exports. With the recent amendments and Provisions in MM(R&D) Act, October 1996, the minerals and mining sector, which was earlier reserved exclusively for the public sector, has now been opened up for the private sector and the investments in the industry are being encouraged. The Government of India is making efforts to boost up the activities like research and making the mining and mineral’s industry more competitive.

India has around 20,000 known mineral deposits and the geological potential in this regard is very substantial. The mining sector in India has already reached a high level of development. The majority (about 80%) of the mines are concentrated in the seven states of Andhra Pradesh, Bihar, Orissa, Madhya Pradesh, Rajasthan, Gujarat and Karnataka. To the total mineral production, the public sector companies operating in the Indian mining industry contribute 100% of copper, diamond, lead, silver and zinc and lignite, 98% of coal, 60% of iron ore and 50% of manganese, bauxite, chromate and dolomite


Minerals (both in raw and processed form) constitute a significant portion of India’s exports trade.
Diamond (mostly cut) continues to be the largest constituent with 81% share of the Indian mineral exports.

Crude oil is the largest constituent of imports with 42% (approx) share followed by diamonds (uncut).

Analysis of Indian Mining Industry


    1. With the aim of encouraging investment in mining industry in India, the government offers a wide range of concessions to investors engaged in the mining activity.
    2. India is the world’s largest producer of mica; third largest producer of coal and lignite; and also ranks among the top producers of iron ore, bauxite, manganese ore and aluminum.
    3. The availability of cheap labour for the industry offers a major attraction to the global players.
    4. India offers low labour and conversion costs.
    5. India still has a large quantity of untapped high quality reserves.
    6. India exports iron-ore to China and Japan on a large scale.
    7. Strategic location: India’s Proximity to the developed European markets and fast-developing Asian markets for export of steel, aluminum also offers an added advantage.


    1.India still does not have properly developed infrastructure facilities in the sector.
    2.The mining technology is often outdated.
    3.Low innovation capabilities
    4.Labor force is highly un-skilled and inexperienced.
    5.High rate of accidents gives rise to a number of health and safety issues.
    6.Lack of R&D efforts and training and development

Emerging Challenges in Mining Industry

Technological challenges The technology being used in India is outdated and needs to be brought up to date.

Environmental issues– The threats and effects on the environment due to the various functions of this industry constitute a growing concern.Health and safety issues- The increasing number of accidents in the industry has posted a lot of health and safety issues for the workers in the sector.


Minerals and mining sector can be broadly classified into two sectors:

OIL AND GAS INDUSTRY- Oil and gas industry broadly covers the exploration and mining of all the sources of power, i.e. crude oil, petroleum refining and its products like LPG, natural gas.

Oil and gas represent over 40 per cent of the total energy consumption in India. India is heavily dependant on imports to fulfill this demand. The Government of India has opened, increased and is encouraging foreign participation in the oil and gas sector. For the year 2000-01, out of the total mineral production of Rs. 568070 million, contribution of petroleum and natural gas was Rs 261319 million. Crude oil and petroleum products account for 35 percent of the total imports of India.

ONGC and RIL are the two major players in this industry and are neck on neck in terms of profit, market capitalization and competition. The investment in the sector is increasing at a tremendous rate and many new projects and expansion plans are in the pipeline.

METALS AND MINERALS INDUSTRY- Metals and minerals category includes all the atomic minerals, metallic minerals and non-metallic metals, ferrous minerals and non-ferrous minerals, industrial minerals and fertilizers minerals, i.e. minerals like gold, silver, diamond, iron, chromium, copper, lead, zinc, aluminium, mica, bauxite, graphite, tin, platinum, cobalt, limestone. India has a base of 61 non-fuel minerals.

India’s production of minerals consists of 84 minerals comprising 4 fuel, 11 metallic, 49 non-metallic industrial and 20 minor minerals. For the year 2000-01, out of the total mineral production of Rs. 568070 million, contribution of metals and minerals other than petroleum and natural gas was Rs. 306751 million.

Indian Mining & Minerals Industry

The mining industry in India

The mining industry in India contributes greatly to its GDP and its share in the GDP stands at around 2.5%. Therefore, we can call it a major economic activity. If we take into consideration the GDP of entire industrial sector, the contribution of mining stands at a whopping 11%. As far as employment generation is concerned, this sector is responsible for creating around seven lakh jobs. India is among the top five producers of iron ore, bauxite, and sheet mica in the world. The total worth of India’s mining and metal industry is around US$110 billion. But, from time to time, Indian mining industry has been accused of environmental and human rights violations. In the recent past, mining industry is marred by numerous scandals and corruption cases, which run into billions of rupees.

Mineral production in India

There are various small operational mines in India and the number of these mines is reported to be around 2100, except petroleum, natural gas, minor minerals and atomic minerals. The maximum number of these mines is located in the state of Andhra Pradesh (350), Gujarat (300), Rajasthan (240), Madhya Pradesh (220), Karnataka (175), Tamil Nadu (150), Orissa (120), Jharkhand (105), Chhattisgarh (100), Maharashtra (85) and Goa (70). Together, these states are responsible for 94% of total mines in India. Production wise, these 11 states were responsible for 91.5% production of minerals.

The offshore areas are responsible for 26% of national mineral output. Orissa was second with 12% share. The sector was largely dominated in India earlier by the individual leaseholders and regional associations of mine operators. To promote the interests of mining and metallurgical production, and to address the issues faced by the mine operators, a federation was established in 1966 as a nonprofit body. The different issues faced by these associations and mine operators included issues related to exports, lease grants, tenors, renewals, taxation, labor, and production.

Federation of Indian Mineral Industries (FIMI)

This federation was named as the Federation of Indian Mineral Industries FIMI, which has 350 individual members and associations, at present. Various activities such as metal making, mineral processing, mining, cement and other related industries such as marble, stone, granite, and slate were included in the domain of this federation. It covered joint, private and public sectors in India. Except fuel mining, the federation represents the rest of mining activities in the country.

De-regularization and liberalization

Mineral production and processing is de-regularized and liberalized as far as recent achievements of FIMI in this sector are concerned. However, FIMI feels that de-regularization has not penetrated down to the state level. According to Indian Constitution, all fuels and minerals are the properties of the individual states. So, many of the development policies implemented by the federal government are not implemented by the individual states and concerned agencies. FIMI is working towards achieving this at implementing agencies’ level as well.

The Future Outlook

The mining industry in India is trying to improve its operational performance through managing its capacity utilization and by undertaking strategic joint ventures. Foreign funds flow is also expected for further development of exploration and mining. The government needs to implement investment friendly policies and create a regulatory framework, so that India can take advantage of the technology and capabilities of the global exploration giants. Strategic alliances should be built and the special mining regions should be developed for the growth of this sector.