• For excavation of diamonds and other precious stones, maximum 74 percent FDI is allowed under automatic route.
• 100 percent FDI is permitted under automatic route for exploration and mining of gold and silver and other minerals excluding diamonds and precious stones.
• 100 percent FDI is allowed in metallurgy and processing under automatic route.
• The Government policies regulating the automatic approval of FDI in the Indian mining sector, the automatic route for FDI flows and/or technology related joint ventures have experienced substantial liberalization .
• FDI upto 100 percent is permitted in the private Indian companies operating in the power projects and also in the coal and lignite mines.
• For establishing coal-processing plants foreign investors are allowed to have 100 percent share. However FDI in this context is subject to the condition that the company will not be engaged in mining coals and selling washed coal or seized coal from its coal processing plants in the open market. Instead it should supply the washed or seized coal to those dealers who supply raw coal to coal processing plants for washing or sizing.
• 74 percent FDI is permitted for exploring or mining of coal or lignite for confined consumption.
• The Government policies regulating the automatic approval of FDI in the Indian mining sector, the automatic route for FDI flows and/or technology related joint ventures have experienced substantial liberalization
• FDI upto 50 percent is allowed through automatic route in coal or lignite sector subject to the condition that investment of this type should not be more than 49 percent of the equity of a public sector undertaking.
• If the FDI proposals do not fulfill the criteria mentioned earlier, approval will be granted by the Foreign Investment Promotion Board considering the project size, commitment given by external resources for funding project costs, the company's past record in the field of mining and fiscal strength, the standard of technology used for mining and the percentage of share hold by the Indian partner.

With an attempt to encourage private investment in coal and lignite mines subject to certain conditions, the Coal Mines (Nationalization) Bill, 2000 was introduced in Parliament on April 24, 2000, to amend the existing Coal Mines (Nationalization) Act, 1973.

Incentives For Investment

The incentives offered by the Government of India to the investors willing to invest in India's mining sector are as follows:

• Complete tax holiday for a period of 5 years from the beginning of production is granted for investment in mining in some specified backward area. For 5 years thereafter the extent of tax relief is 30 percent.
• The equipments used for environmental protection, pollution control, energy preservation and certain other purposes are entitled to 100 percent depreciation.
• One tenth of the cost incurred in extracting or production of certain minerals during the first five years of commercial production is permitted as deduction from total income.
• Certain tax relief is granted under the Income tax Act on the export profits from certain minerals and ores.
• Minerals in their finished form have been fully freed from the purview of excise duty
• Capital equipment used mining of nickel, tin, pig iron, unwrought aluminum are subject to low customs duty
• Imports of capital goods (used for mining activity) falling under the domain of Export Promotion Capital Goods (EPCG) Scheme are eligible for certain concessions subject to certain export obligation.