India: Govt proposes excluding forest area in initial lease deed for faster operationalisation

• • Move aimed at fast-tracking operationalisation of auctioned mines

• • Lol to be automatically issued post auction, performance security payment

The Indian government has proposed segregating forest and non-forest areas, into two leases in future mines.

In an attempt to fast-track operationalisation of auctioned mines, the Mines Ministry will allow part execution of mining leases, which will require an amendment to the Mineral (Auction) Rules, 2015. Following these amendments, lessees will be able to execute leases separately for forest and non-forest areas with certain conditions. They can also start with a Mine Development and Production Agreement (MDPA) for the non-forest area.

Amendments are called for, as the ministry prepares to launch its unified, single mining portal which will collect all data, from land status, environmental clearances, letters of Intents and other regulatory clearances to eventually even mining transport and dispatch. This portal will automatically issue a letter of intent (Lol) once an auction is held, and performance security paid, reducing the period from date of issue of Lol to execution of the mining or compensatory lease.

Suggestions for the proposed, ‘Mineral (Auction) Second Amendment Rules, 2026’ are called for on or before 23 February 2026. The proposed changes will:

• • Allow the State Government to allow the preferred bidder to exclude the forest area, in case the portion is in a corner or at the edge of the block and the estimated quantity of mineral resources in that portion is less than 20% of the total estimated resources of the block.

• • Allow execution of lease for non-forest area and forest area separately in blocks that do not contain deep-seated minerals.

• • In such cases the Mine Development and Production Agreement will also be signed in two parts, first for non-forest part and subsequently for the entire block area once all consents, approvals, permits, no-objections and the like are received.

• • In case of execution of part mining lease, there shall be no reduction in the amount of instalments of upfront payment.

• • The part leases shall be amalgamated under rule 56 of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016.

• • Where NIT is issued after the commencement of the Mineral (Auction) Second Amendment Rules, 2026, payment of the second instalment of the upfront payment are to be made within one year from the date of issue of LoI.

• • Changes are also being made to return security and payments where an auction has been annulled for reasons not attributable to the preferred bidder.

• • For minerals (other than critical minerals), an amount equal to 1.50% of the value of estimated resources shall be payable to the state government in three instalments (33%, 33%, 34%) and adjusted in full against the auction premium when production begins.

• With these changes, and once the proposed unified portal is launched, various processes and implementation of and compliance to the rules will be done only through the portal.