Karnataka Deputy Chief Minister G. Parameshwara on Tuesday, 18 August wrote to Prime Minister Narendra Modi and Union Minister for Coal and Mines G. Kishan Reddy, urging the Centre to reconsider the Mines and Minerals (Development and Regulation) Amendment Bill, 2026. Parameshwara argued that key provisions of the Bill would curtail the constitutional authority of states to levy taxes on mineral rights and mineral-bearing lands — powers that the Supreme Court explicitly affirmed in a landmark 2024 ruling.

The Constitutional Flashpoint

At the heart of the dispute is the Supreme Court's 2024 judgment, which upheld the legislative and fiscal powers of states under Entries 49 and 50 of the State List — covering taxation of mineral-bearing lands and mineral rights respectively. Parameshwara contended that the proposed MMDR amendments would directly override a constitutional position that the country's highest court had only recently clarified.

'The proposed amendment to the MMDR Act has direct implications not merely for a theoretical future source of revenue but for a legislative field which the State Legislature has already exercised pursuant to the constitutional position clarified by the highest court of the country,' he stated in the letter.

Federalism Concerns at the Core

The Deputy Chief Minister described the Centre's approach as 'unilateral' and warned that it raised serious questions about India's federal structure. He called for structured, time-bound consultations with all state governments — particularly mineral-producing states — before any legislation affecting their taxation powers is advanced.

Parameshwara also flagged the broader fiscal squeeze facing states. He argued that states had already surrendered significant taxation powers following the rollout of the Goods and Services Tax (GST), even as their spending responsibilities in public infrastructure, education, healthcare, drinking water, agriculture, urbanisation, and welfare programmes have continued to expand. 'States are carrying growing responsibilities with shrinking fiscal space,' he said.

What Karnataka Is Proposing

Parameshwara put forward five specific measures for the Centre's consideration: withdrawing the MMDR Amendment Bill in its present form; holding structured consultations with state governments; establishing a permanent Centre-State consultative mechanism; accounting for existing and proposed state legislation — including Karnataka's own 2024 Mineral Rights and Mineral Bearing Land Tax Bill; and building a consensus-based national framework that balances investment, mineral development, and critical-mineral security without extinguishing state fiscal autonomy.

He also cautioned that rolling back a constitutionally recognised taxation field immediately after the Supreme Court had clarified its scope could set a precedent with implications well beyond mineral taxation alone.

The Bigger Picture

The dispute sits within a long-running tension between the Centre's drive to streamline mineral governance — particularly for critical minerals essential to India's clean-energy transition — and states' insistence on retaining fiscal control over their natural resources. Mineral-producing states, Parameshwara noted, also bear substantial social, environmental, and infrastructure costs associated with mining activity.

'The Union Government must therefore consider not merely whether Parliament possesses a power, but also how that power ought to be exercised within the spirit of cooperative federalism,' he said. 'A developed India requires developed States. An Atmanirbhar Bharat requires financially self-reliant states. And cooperative federalism requires states that are empowered partners, not financially dependent implementing agencies.'

With Karnataka's Congress-led government formally placing its objections on record, the Centre now faces mounting pressure from mineral-rich states to pause and consult before the Bill advances further.