Tamil Nadu Revises District Mineral Foundation Rules

The Government of Tamil Nadu has revised the District Mineral Foundation (DMF) Rules to strengthen the utilisation of funds for communities and regions affected by mining activities. The newly notified Tamil Nadu District Mineral Foundation Rules, 2025, replace the earlier rules framed in 2017, signalling a shift in regulatory approach and compliance mechanisms.

Stricter Financial Penalties for Violations

Under the revised rules, holders of mining leases, composite licences, quarry leases, or permits who fail to comply with mandatory contributions to the District Mineral Foundation Trust will face financial penalties. The penalty includes a one-time payment equivalent to the contribution amount, in addition to the contribution itself, along with 12% interest for the period of contravention. This marks a departure from the 2017 rules, which prescribed imprisonment of up to two years, a fine of up to ₹5 lakh, or both.

Changes from the 2017 Framework

Earlier provisions also included additional daily fines of up to ₹50,000 for continuing violations after the first conviction. The 2025 rules remove custodial punishment and instead emphasise financial deterrence and recovery. This change is aimed at ensuring faster compliance and uninterrupted flow of funds to the DMF without prolonged legal processes.

Governance and Fund Collection Mechanism

The District Collector concerned will serve as the chairperson of the District Mineral Foundation Trust, its Managing Committee, and the Governing Council. The rules mandate that all royalty or seigniorage fee payments must be collected along with the Trust Fund component. No royalty or seigniorage fee will be accepted without the mandatory DMF contribution, ensuring tighter enforcement and accountability.

Imporatnt Facts for Exams

• District Mineral Foundation funds are meant for mining-affected areas.
• Tamil Nadu DMF Rules, 2025, replace the 2017 rules.
• At least 70% of DMF funds must be spent on directly affected areas.
• District Collector heads the DMF Trust and its governing bodies.

Priority Spending and Endowment Fund Provision

The revised rules specify that a minimum of 70% of the Trust Fund must be spent on directly affected areas and high-priority sectors such as drinking water supply, environmental preservation, healthcare, education, and women’s welfare. Districts with annual DMF collections of ₹10 crore or more are required to maintain an endowment fund of up to 10% of annual receipts. This fund will support sustainable livelihoods, particularly in regions where mining has ceased due to mineral exhaustion or other reasons.