The Union Cabinet has decided to raise the mining royalty rates with a few exceptions like coal and lignite. The rate of royalty on iron ore has been raised to 15 per cent from the existing 10 per cent.

Royalty is a tax levied by the government on miners in lieu of transfer of ownership rights of mines. While the government views it as a source of revenue, industrialists look at it as part of production costs.

The proposals for the Cabinet approval were based on the recommendations of a study group set up by the UPA government in 2011.

There are 51 minerals prescribed in the second schedule of the Mines and Mineral (Regulation and Development) Act, 1957 and the rates differ from mineral to mineral.

Almost all minerals including bauxite, limestone, zinc and copper would be affected by the new royalty rates. While the royalty is collected by the states, the Centre has the power to revise them.