The Odisha government announced that it approved the amendment to the Mining and Minerals Development and Regulation (MMDR) Act and will put all new non-coal mines and those pending for second and subsequent renewals to public auction through competitive bidding process.
The decision was taken at a cabinet meeting presided by Chief Minister Naveen Patnaik.
Officials said the move would make the mining sector more competitive and provide clarity to Indian and foreign companies in the sector, The Economic Times reported.
It is the latest in the series of ordinances that the Modi government has decided to issue as it faces a hostile opposition in the Rajya Sabha, where the ruling party is in a minority. It has issued ordinances for changes in laws governing coal, insurance and land acquisition after opposition parties disrupted the Rajya Sabha.
Government and industry sources said that the latest ordinance will facilitate transfer of leases and allow a bigger scale of operations for mining companies and attract global majors such as Rio Tinto into the mining sector of the country.
Industry officials say that appropriate policies in the mining sector can significantly boost mineral production and stimulate economic growth and exports.
India's mining sector has been mired in controversies which led to judicial intervention and cancellations of numerous coal mines as well as bans on mining in some cases. Sources said that the government had to amend the MMDR Act to insulate the sector from future controversies and legal tangles.
The mines ministry had issued a draft of the MMDR Act 2014 in December and said auctions will eliminate delay, bring the government its fair share of the value of minerals and attract private investment.
The government proposes to start with minerals such as iron ore, manganese, bauxite and limestone that occur more or less on the surface, have been explored extensively and account for 85 percent of India's production.
Many in the industry had opposed measures proposed in the draft. The Federation of Indian Mineral Industries (Fimi), representing some of the country's largest miners such as Aditya Birla Group's Essel Mining and the Rungta Group, described the amendments as a "retrograde step" that haven't been adopted anywhere else in the world.