Centre rolls out Rs 5,175 crore mine reform incentive scheme

The finance ministry has firmed up guidelines for states to claim incentives worth Rs 5,175 crore for expediting operationalisation of mines , improving mineral production and implementing key governance reforms under the Scheme for Special Assistance to States for Capital Investment (SASCI) 2026-27. States will need to bring 79 auctioned major mineral and critical mineral blocks into production, equivalent to 10% of the 684 blocks auctioned by states and the Centre until March 31, as per the guidelines. States will have to operationalise the mines by December 31. Rajasthan and Madhya Pradesh need to operationalise at least 13 mines each to qualify for the incentive, Odisha eight, Karnataka and Chhattisgarh seven each, Gujarat six and Maharashtra five, with the rest to be done by other states. Of the total outlay, Rs 2,500 crore has been earmarked for operationalisation of mines, Rs 2,000 crore for implementation of mining reforms and Rs 675 crore for rewarding top performers under the State Mining Readiness Index . The biggest incentive is linked to operationalisation of mines. States will receive Rs 20 crore for every major mineral block auctioned during 2026-27, with forest, environment and land clearances already in place, subject to a maximum payout of Rs 200 crore. States that operationalise at least 10% of all major mineral blocks auctioned till March 31 will qualify for an additional incentive of Rs 250 crore. A separate Rs 100 crore incentive will be available to states completing five reforms identified by the ministry. These include integration with the Centre's Unified Mining Portal, constitution of a pre-auction committee to resolve land issues, setting up a chief secretary chaired committee to monitor mine operationalisation, publication of an annual auction calendar and adoption of technology to detect or prevent mineral grade misclassification. The remaining Rs 675 crore will be awarded to the top three states in each of three categories under the State Mining Readiness Index. The first ranked state in each category will receive Rs 100 crore, the second Rs 75 crore and the third Rs 50 crore. Applications for incentives under the mining reform and State Mining Readiness Index components must be submitted by December 15, while applications under the mine operationalisation component will close on December 31. The mines ministry will scrutinise the claims before recommending release of funds by the finance ministry. Under the SASCI scheme, the Centre provides 50-year interest-free loans to states for capital expenditure. A portion of the allocation is linked to reforms, while the remaining amount is untied, allowing states flexibility in selecting projects. The Centre has allocated Ra 2 lakh crore under the scheme for this financial year. The incentives for mining sector reforms were included last year under the scheme.