(A) Private Participation in the Mining Sector

The National Mineral Policy was revised in 1994 and as a result, private investment (both domestic and foreign), has been permitted for the exploration & exploitation of the thirteen minerals listed alongside.In 1994, the President promulgated the Mines and Minerals (Regulation and Development ) Ordinance, 1994, thereby amending the Mines & Minerals (Regulation & Development) Act, 1957 (the ordinance was later ratified by Parliament). The Act has been amended with a view to accelerate the inflow of private capital, both domestic and foreign, as also state-of-the art technology.

    Iorn - ore
    Copper
    Manganese
    Lead
    Chrome ore
    Zinc
    Sulphur
    Molybdenum
    Gold
    Tungsten ore
    Diamond
    Nickel
    Platinum group of metals

The highlights of the Amendments to MMRD Act are as follows:

(1) Ease restrictions of foreign equity holdings in mining companies Any company registered in India irrespective of foreign equity holding, can apply for a Prospecting License or a Mining Lease (subject to approvals required).
(2) Removes 15 minerals from the first schedule of the MMRD Act. The State Governments do not have to take prior permission of the Central Government for granting of Prospecting Licenses or Mining Leases in respect of the following minerals:

Exploration and exploitation of only the following 11 minerals, apart from the atomic and fuel minerals, require prior Central Government approval.

The State Government have been delegated powers for first renewal of PL/ML under MMRD Act, 1957, for all the specified minerals covered under Part C of First Schedule.

The Indian mining sector was opened up to Foreign Direct Investment in 1993. Initially, all proposals were considered on a case to case basis by the Foreign Investment Promotion Board (FIPB). FDI policy in the mining sector was further liberalised in January 1997 which opened up an "automatic approval" route forinvestments involving foreign equity participation upto 50% in mining projects, and upto 74% in services incidental to mining. (FDI in gold, silver, diamonds, precious and other semi-precious stones is outside the automatic route). FDI upto 100% equity stake is presently permitted in all mining related activities. Any overseas entity wishing to invest in the mining sector can set up shop in India either under the automatic route (upto 50%/74% equity participation) or through the FIPB (for proposals above that, and for investment in gold, silver, diamonds, precious and other semi-precious stones) which considers the application on merits of parameters such as size of the project, commitment of external resources for project funding tract record of company in mining sector, level of technology sought to be inducted in the project, financial strength of the company and level of equity holding of Indian partner, etc.

India possesses a rich wealth of mineral resources and a flourishing mining industry producing 84 minerals out of which 4 are fuel minerals, 11 metallic, 49 non metallic and 20 minor minerals. However, there exists considerable scope for augmenting the resource position by further exploration of known deposits and discoveries of new deposits, adopting state-of-the-art technology and modern methods like aerial reconnaissance or geophysical surveys. Being aware of the vast potential of the sector, the Indian Government, has been consistently and in a pragmatic manner opening up the previously controlled regime to usher private investment in the sector and infuse funds, technology and managerial expertise.

The geological and metallogenic history of India is similar to mineral rich Australia, South Africa, South America, and Antarctica, all of which formed a continuous landmass prior to the breaking up of Gondwanaland. It also has some features similar to the mineral rich Canadian shield of North America. The opening up of the Indian mining sector has, therefore, generated considerable global interest. The Foreign Investment Promotion Board (FIPB) has so far cleared 50 proposals aggregating an investment of over 3000 Crores in the mining sector. This is in addition to what may have come in through the automatic route, where no reference to FIPB is necessary.

The majority (32 out of a total of 50) of FIPB approvals have been given to private sector mining companies from North America(8 USA and 3 Canada), Australia (10), U.K(6) and South Africa (4). Most of this investment is in the pipeline as investment in the mining sector has a long gestation period, with investors having to apply to State governments for prospecting and mining licences. 7 proposals are in the Aluminium sector, 9 in base metals, 4 in diamonds, 4 in technical consultancy, 3 in mineral sands, 2 in gold and 2 in Iron ore.

All matters relating to exchange control are governed by the Reserve Bank of India ('RBI') which is the central bank of India. Foreign nationals do not require work permits for undertaking employment in India. Foreign nationals who are not permanently resident in India can establish bank accounts in India in Indian currency subject to approval by RBI. Such accounts however, can be operated for approved purpose only.

Foreign nationals are allowed to repatriate upto 75 percent of their net salary earnings from India. Higher repatriation has to be approved by the RBI.

No RBI approval is required for engagement or foreign nationals, if the following conditions are satisfied: Prior approval of Ministry of Home Affairs is to be sought, if the duration of engagement of any single foreign national exceeds 3 months;

total duration of engagement of foreign nationals does not exceed 12 man-months in a calendar year.

the amount sought to be remitted is in line with the contract entered for this purpose.

the services of the foreign national should not be covered under any other contract, wherein they are required to be rendered free of charge or remuneration.

Indian companies receive automatic approval for technology transfer agreements with foreign companies provided that the term of payment satisfy the following conditions specified by the Government;

The lump sum know-how fee payable does not exceed US $ 2 million.

Royalty payments do not exceed 5 percent of domestic sales and 8 percent of exports.

The payments are subject to an overall ceiling of 8 percent of total sales over a 10 year period from the date of agreement, or over a 7 year period from the date of commercial production. These payments may be net of Indian taxes.

Any foreign national who wishes to enter India, whether, for business or otherwise, must obtain a visa. Each visa specifies the period within which the individual must enter India and the period for which he is permitted to stay.

Any foreign national who intends to stay in India for a period exceeding 180 days is required to register himself with the local Foreigner's Regional Registration Office. The spouse and children of foreign nationals are also required to register themselves it they are foreign nationals, and intend to stay for a period exceeding 180 days.