Role of Mining Industry in Indian Economy

The Mining industry in India is a major economic activity which contributes significantly to the economy of India. The GDP contribution of the mining industry varies from 2.2% to 2.5% only but going by the GDP of the total industrial sector it contributes around 10% to 11%. Even mining done on small scale contributes 6% to the entire cost of mineral production. Indian mining industry provides job opportunities to around 700,000 individuals.

India is the largest producer of sheet mica, the third largest producer of iron ore and the fifth largest producer of bauxite in the world. India’s metal and mining industry was estimated to be $106.4bn (£68.5bn) in 2010.


Along with 48.83% arable land, India has significant sources of coal (fourth-largest reserves in the world), bauxite, titanium ore, chromite, natural gas, diamonds, petroleum, and limestone. According to the 2008 Ministry of Mines estimates: ‘India has stepped up its production to reach the second rank among the chromite producers of the world. Besides, India ranks 3rd in production of coal & lignite, 2nd in barites, 4th in iron ore, 5th in bauxite and crude steel, 7th in manganese ore and 8th in aluminium’.

Role of Mining Industry in Indian Economy

India accounts for 12% of the world’s known and economically available thorium. It is the world’s largest producer and exporter of mica, accounting for almost 60 percent of the net mica production in the world.


The net production of selected minerals in 2005-06 as per the Production of Selected Minerals Ministry of Mines, Government of India is given in the table below:

Mineral Quantity Unit Mineral type
Coal 403 Million tonnes Fuel
Lignite 29 Million tonnes Fuel
Natural Gas 31,007 Million cubic metres Fuel
Crude Petroleum 32 Million tonnes Fuel
Bauxite 11,278 Thousand tonnes Metallic Mineral
Copper 125 Thousand tonnes Metallic Mineral
Gold 3,048 Thousand grammes Metallic Mineral
Iron Ore 140,131 Thousand tonnes Metallic Mineral
Lead 93 Thousand tonnes Metallic Mineral
Manganese Ore 1,963 Thousand tonnes Metallic Mineral
Zinc 862 Thousand tonnes Metallic Mineral
Diamond 60,155 Carats Non Metallic Mineral
Gypsum 3,651 Thousand tonnes Non Metallic Mineral
Limestone 170 Million tonnes Non Metallic Mineral
Phosphorite 1,383 Thousand tonnes Non Metallic Mineral

Impact of currency depreciation

  • The Rupee’s depreciation is on balance and is positive for the Indian mining sector. Most of the mining companies in India are net exporters and would experience a positive impact on bottom lines.
  • The ban on iron-ore mining in Karnataka and Goa resulted in a current account deficit, making it imperative for the government to curb imports and promote exports.
  • Hikes in export duty, and restriction on mining and blanket bans have prevented the government from earning forex revenue on exports.

Future of the mining industry in India

  • Despite the slowdown, India is still the second-fastest growing economy, after China.
  • Demand for minerals, as well as for mining services, is robust in the country.
  • Mining in India is becoming more structured, and companies have started outsourcing part of the project to mining service companies.
  • The largest mining company in India, i.e., Coal India Limited (CIL), plans to invest around INR254 billion during the Twelfth FYP (2012–17).
  • Contract mining could prove to be a solution to the on-going current coal deficit in country.