A farmer owns 5 acres. He can sell it, lease it, fence it, build on it. Then one day he hears there’s iron ore (or limestone, or coal) under it. Surveyors arrive. A company shows up with paperwork. The government talks about “the block.” The farmer asks the most normal question in the world:
“If it’s under my land, how can I not own it?”
That confusion isn’t stupidity. It’s the system.
India has spent decades treating what’s beneath land as an administrative domain (“permits and auctions”), while people experience land as a property domain (“I own it”). The mismatch creates delays, litigation, corruption surfaces, and—most importantly—lost industrial momentum.
This blog will do two things, exhaustively:
- Explain surface rights vs mineral rights so a normal reader truly gets it.
- Explain why India’s current system is inefficient, concentrated, and externality-prone.
1) The core concept: Land has layers
Think of property as a layered building:
- Surface rights: the penthouse. House, farm, road access, trees, borewell—everything you touch.
- Mineral (subsurface) rights: the basement. Coal, iron ore, bauxite, limestone, oil, gas, and “critical minerals” feeding batteries/grids/chips.
In many legal systems these layers can be split. That’s called a split estate.
So you can have:
- Person A owns the surface (the farmer).
- Person B owns the minerals (often the state/Crown; sometimes a private owner).
- Company C leases mineral rights and extracts resources.
Once you understand “split estate,” the rest of the story becomes obvious: every country’s mining speed is mostly a function of how cleanly it manages that split.
2) Why this matters for India’s development
India is already a minerals-and-energy-scale country.
- India’s coal production in FY 2024–25 (provisional) reached about 1047.69 million tonnes. (Ministry of Coal)
- India produced 29.36 MMT of crude oil in 2023–24, and gas production rose to 36.44 BCM in 2023–24. (Press Information Bureau)
Those aren’t small numbers. They are “civilization runs on this” numbers.
So what’s the issue?
The issue isn’t whether minerals matter. The issue is whether India can convert underground potential into:
- cheap and reliable industrial inputs,
- predictable local incomes,
- tax/royalty flows,
- and faster buildout of steel/cement/power/manufacturing.
Right now, India’s biggest problem isn’t geology. It’s coordination cost—and much of it is self-inflicted by system design.
3) What’s wrong with India’s current system (inefficiency + concentration + negative externalities)
3.1 The headline inefficiency: we allocate rights but fail to operationalise mines
India’s post-2015 reforms made auctions central. Auctions are meant to increase transparency and reduce discretionary allocation.
But the scoreboard says the main bottleneck moved downstream—from “who gets it” to “can anyone start producing.”
Government documents make this hard to ignore:
- A Rajya Sabha question/answer (Aug 4, 2025) states only 50 out of 404 auctioned non-coal mineral blocks had been operationalised since 2015. (Digital Sansad)
- A PIB release (Apr 2, 2025) says since 2020, 392 non-coal major mineral blocks were auctioned and 32 were operational. (Press Information Bureau)
You can argue about the exact denominator by category and timing. The direction is unmistakable:
India is good at “award events.” India is bad at “production events.”
And the government itself is now explicitly trying to fix operationalisation speed by inserting intermediate milestones/timelines into the rules. (Digital Sansad)
That is basically an official admission that the machine is slow.
3.2 A real-world symptom: imports rise because domestic supply doesn’t come online fast enough
If the operationalisation gap feels abstract, watch what happens in industry.
Reuters reported that India’s iron ore imports (Jan–Oct 2025) jumped to a six-year high (over 10 million tonnes), and noted that delays in production at auctioned mines contributed to supply constraints. (Reuters)
This is what inefficiency looks like in practice:
- a mine is “won” on paper,
- production is delayed,
- domestic supply tightens,
- imports rise,
- competitiveness takes a hit.
Call it what it is: a delay tax on the entire economy.
3.3 Concentration: auctions don’t automatically create competitive markets
Even with auctions, outcomes can remain concentrated.
The Competition Commission of India’s market study on mining (iron ore focus) highlights high concentration and notes that iron ore blocks auctioned after 2015 were dominated by large players—citing JSW accounting for ~47% in that context. (Competition Commission of India)
This matters because concentrated control changes the game:
- Entry is harder for smaller operators.
- “Who can survive uncertainty” wins, not “who can run the best mine.”
- Captive structures can skew availability and market dynamics.
So the critique isn’t “government bad, private good.”
The critique is: a rights system that is slow and discretionary tends to reward concentration and political navigation.
3.4 Coal India: the cleanest example of massive government market impact
Coal is where government involvement is not just regulation—it’s market structure.
India’s coal output in FY 2024–25 was about 1047.69 MT, and Coal India produced 781.08 MT—roughly three-quarters of national production. (Ministry of Coal)
When one producer controls ~75% of supply, two things happen:
(1) Competitive pressure is structurally weaker.
(2) Any efficiency gap becomes a macro issue.
For example, “Output per Man Shift” (OMS)—a standard productivity measure—shows that in 2022–23, open-cast OMS was 16.11 tonnes for CIL versus 22.08 for SCCL in the Ministry of Coal’s provisional statistics. (Ministry of Coal)
I’m not claiming OMS alone decides everything. But it illustrates the point: when the dominant producer is not the frontier, the economy inherits that drag.
3.5 Negative externalities: opacity + weak enforcement breeds leakage and illegality
Mining’s externalities are real. But systems determine whether those externalities are bounded or weaponised.
India’s audit record repeatedly points to illegal mining and revenue leakage when monitoring and enforcement are weak. For example, the CAG performance audit on mining in Uttar Pradesh references large financial implications and enforcement gaps; reportage around it cited substantial unrecovered revenue and monitoring failures. (Comptroller and Auditor General of India)
The important point for this blog is not “look, corruption exists.” The point is:
When rights are unclear and enforcement is discretionary, delay and leakage become monetisable.
That’s not a cultural problem. That’s a design problem.
Auctions fixed allocation. They didn't fix conversion. The bottleneck moved — from "who gets the block" to "can anyone start producing."
That's a design problem. And design problems have design solutions.
Two countries figured this out. Texas went one way. Australia went another. Both work.
In Part 2 - We explore what each model looks like, what it would mean for Indian landowners, and what India should copy.
