Members of a government appointed Study Group recommended the government to avoid any hike in royalty for zinc, lead and other non-ferrous minerals as it would adversely affect the domestic mining industry.

It may be recalled that the government formed this group to recommend royalty rates for these minerals. The group consists of industry bodies like Ficci, Assocham and CII, the Federation of Indian Mineral Industries (FIMI) and governments of mineral-rich states.

The government revises royalty rates on minerals every three years. The current royalty rate on zinc and lead is 8.4 percent and 12 percent respectively and the government is believed to be considering a further rise in the rates. The respective rates stood at 3.5 percent and 4 percent in 1997.

In a letter to the Special Secretary to the union ministry of mines Gauri Kumar, Assocham and Ficci argued against any hike in royalty on these minerals to protect the interest of miners.

The Study Group held a meeting on this issue recently and it is expected to finalise its recommendations to the government by June this year.

Assocham argues that if the royalty is hiked, it would add additional burden on miners besides the district mineral fund (DMF) proposed by the MMDR Bill. There is a proposal in the MMDR Bill where industry will have to deposit equal amount of royalty to a DMF.

Royalty on zinc and lead should not be more than 5 percent of LME on an ad valorem basis so that when the new MMDR Bill comes into force, the total implication, including royalty and DMF, will be a maximum of 10 percent, Assocham said in its letter to the mines ministry.