24th October, 2016
The Principal Secretary,
Government of Andhra Pradesh,
Sub: Representation on DISTRICT MINERAL FOUNDATION’s TAX OF 30 PERCENT
On current royalty for both granite in the state of A.P.
The Federation of Andhra Pradesh Granite Industry, (FAPGI)is a recently formed association mainly comprising granite mining lease/quarry holders and allied stake holders. The Federationseeks to work with the Government, policy makers and other allied industry associations for improving the state of the industry.
As reported in the latest GDC Sub-Committee Report submitted to Ministry of Mines, Govt. of India, the royalty rates on granite mining leases in the state of Andhra Pradeshis very high.Moreover, an additional 30% District Mineral Fund Tax (DMF) being imposed which is a further burden and worsensour capacity to pay the royalty in an already stressed industry situation. The Federation clarifies that it is not against imposition of DMF but the current rate of DMF being imposedis notfeasiblefor the granite industry.
As you are aware, the current rates of 30% DMF Tax was calculated based on the studies on major mineral mined in statesincludingJharkhand, Chhattisgarh, Orissa where the quantumof material and the impact of mining on people and environment is considerably high. However, the ecological footprint of granite mining is considerably marginal andthe total area of granite mining leases in the entire state of Andhra Pradesh is mere 53 Square Kilometers, as pertinently observed in the GDC Sub-Committee Report. Further, considering the long experience of members of the federation, we firmly believe that that the impact of granite mining is positive as it is a biggest employment generator in those areas and substantial creator of wealth.
Therefore, we stronglyrequest you to orderanindependent impact assessment study on granite mining in the State of Andhra Pradeshand accordingly a fair and practical DMF rate that is feasible to the industry be fixed after arriving at the data and inferences in the interest of all the stakeholders. We further request that the Government consider the impactof granite mining on people in those areas vis-à-vis the environment,to arrive at a DMF rate, in consultation with all the stakeholders.
We are also attaching a comparative analysis of DMF data of all the granite producing states of India for your information and further action.
Thanking you Sir,
For FEDERATION OF A.P. GRANITE INDUSTRY
Enclosures: Annexure 1: DMF DATA & GRAPHS
Sub- Committee’s Conclusion and Recommendation
- The Minimum size of granite quarry should be 5 hectares ….
Federation welcomes the recommendation of amendment of the provision of 5 hectare minimum size of the granite quarry as a principal in case of government lands.
However, in case of any specific deposit that is less than 5 hectares, by recording the reasons by the concerned Mines staff, the lease for less than 5 hectares may be granted.
There are many instances in the history of granite mining, some of the best and successful granite quarries are just around 1 hectare.
Therefore in the paradigm of overall sustainable mining, accepting five hectares as minimum exceptions can be taken into consideration.
Also for existing leases with less than 5 hectares, the lessee may be given discretion to increase the lease extent to five hectares or not depending on the availability of the land or not;
It Is to be noted that the contention of the Govt. to increase the existing leases to 5 hectares is for operational convenience, dumping and stock yard purposes only then Govt. can allow the lessees to add the existing acquired lands and dumping grounds to the lease;
- All existing leases of granite with less than 5hectare area may be granted additional area for ancillary mining activities …..
Federation welcomes the additional grant of area within 500 M to the existing leases that are less than 5 Hectares; However, a clear policy if there is no area available within 500 M; and policy implementation hurdles in terms of NOC’s from Revenue authorities;
- The maximum size of the granite mining lease may be retained as 50 hectares as provided in GCDR 1999.
Federation welcomes the maximum size limit of 50 Hectares;
- The mining leases of granite may be of longer duration and initially lease period may be 50 years minimum…..
- The period of all existing granite leases may be extended to 50 years from initial grant….
Federation welcomes both d & e points.
- The rates of royalty on granite may be on tonnage basis instead of measurement basis for better royalty administration….
Federation welcomes the recommendation regarding taking tonnage instead of measurement of block for royalty while retaining categorization based on block sizes. The suggestion for the rates to the three categories is as follows:
Large blocks = Rs. 300 per ton
Small blocks = Rs. 200 per ton
Boulders = Rs. 20/- per ton
- For ensuring uniform royalty rates in different states the Government of India may prescribe upper limits of royalty for various categories….
Will it be a uniform rate/s across the states? If the minimum rates are implemented, the states with high rates would not want lose the revenue; if higher rates are imposed, the states where lessees with minimum rates would not want to pay;
How do you reconcile and bring a common and uniform rates across the states?
How do you convince the states to adopt a uniform rate policy?
How do you fix a criteria to adopt a upper limit;
- The royalty collection system may be simplified by all states for which they may adopt Rajasthan model of royalty collection with slide modifications, if any, to suit the needs of the state.
We welcome the move of outsourcing the royalty collection. It reduces the burden on the M&G department, higher collection, lower pilferage, helps the dept. of mines and geology personal to focus more on mineral resource development; May involve STATE FEDERATION as part of the monitoring committee and make them one of the stakeholders in the process.
- For effective monitoring of entire quarry activities, … the Quarry Management System may be introduced…
Implementing the QMS system is a most welcome move. It may be implemented phase wise by taking one or two model quarries into consideration in each cluster and gradually implement it in all quarries on a specified time line.
- The pre determined recovery factor should not have any relevance in estimation of royalty.
Federation accept the suggestion
- Dead rent should be so fixed that it is equivalent almost 30% of the average royalty collection from a quarry…
There are concerns regarding fixing the dead rents computed from the average of royalties paid in the previous year. One has to factor into market forces and any fall in the demand would lock the amounts; or else, the Govt. should allow and make provision to carryforward the dead rents for later usage;
- The State Governments may expedite finalization of their Minor Mineral Concession Rules in tune with the MMDR (Amendment) Act 2015 so that grant/renewal of granite quarry leases is not held up.
Welcomes the recommendation
- The mining leases of granite may be granted in a transparent manner by auction…
FEDERATION DOES NOT SUPPORT THE AUCTION PROCESSS. First cum first serve model holds good for the industry; First Explorer of a new deposit should be given priority.
- The area for waste dumping should be earmarked in the lease area and it should constitute a part of a lease area. The earmarked area may also be formed on a cluster basis or on individually, which may not be contiguous.
- The reclamation of waste dump in clusters should be ascertained and it should be part of responsibility of the leases using such cluster dump yard.
- The utilization of granite waste may be encourage for manufacturing of M-sand which is a effective substitute of scares commodity the river sand. The rates of royalty for granite waste used for manufacturing M-sand may be kept nominal.
- The processors which are using granite waste tiles for manufacturing of cobbles or artifact tiles may be encouraged.
- The Environment Clearance (EC) should only be applicable and Consent for Establishment (CFE) and Consent for Operation (CFO) should be dispensed with as EC stipulates all necessary conditions for scientific and sustainable mining and environmental protection and CFE and CFO also stipulates similar conditions.
- Many granite processing units of medium and large scale units have become technologically obsolete and need modernization and upgradation, which may be encouraged.
- India does not have all varieties of granites in colour and texture therefore, import of granite blocks of such colours and textures not available in India, may be permitted with quantitative restrictions on the lines similar to marble and import of granite blocks under OGL may be reviewed subsequently.
- Grant of industry status for granite mining may be considered to facilitate availing loans for mining from the banks.
FEDERATION WELCOMES ALL THE RECCOMENDATIONS FROM POINT ‘N’ TO ‘U’