The Union government has incorporated a ₹5,000 crore incentive mechanism for mining sector reforms under the Scheme for Special Assistance to States for Capital Investment (SASCI) for FY 2026-27. The Ministry of Mines has issued the operational guidelines for this component. The measure is designed to accelerate mine operationalisation, raise mineral output, improve state revenues, and strengthen governance in the mining sector.
Purpose of the Incentive Scheme
The scheme seeks to encourage States and Union Territories with legislatures to undertake reforms that improve the efficiency of mineral administration. It focuses on faster auction, earlier production from allotted blocks, and better monitoring of mining activities. The incentive is linked to measurable reform actions and performance outcomes.
Reform Area One – Mining Reforms
States must complete five reform actions by 15 December 2026 to qualify for ₹100 crore. These include:
- Integration with the Unified Mining Portal for mine operationalisation.
- Constitution of a Pre-Auction Committee to resolve land-scheduling issues.
- Formation of a State-level Coordination Committee for monitoring mine operationalisation.
- Preparation of an annual auction calendar for major minerals and adherence to it as far as possible.
- Adoption of technology-based measures to detect or prevent grade misclassification of mineral ore.
Reform Area Two – Mine Operationalisation
The scheme rewards States for auctioning major mineral blocks with pre-embedded clearances, including forest, environment and land approvals, during FY 2026-27 up to 31 December 2026. The incentive is ₹20 crore per block, subject to an upper cap of ₹200 crore per State. States can also receive up to ₹250 crore for operationalising at least 10% of the major mineral blocks successfully auctioned till 31 March 2026, provided production and dispatch begin during FY 2026-27.
Reform Area Three – State Mining Readiness Index
The Ministry of Mines will release the State Mining Readiness Index (SMRI) 2026-27. The top three States in each of the three categories will receive awards. The incentive is ₹100 crore for first place, ₹75 crore for second place, and ₹50 crore for third place in each category. The index is intended to promote competition, improve preparedness, and encourage better mining governance across States.
Last Modified: April 25, 2026