Cement manufacturers operating in Tamil Nadu are set to benefit from the withdrawal of the Mineral Bearing Land Tax (MBLT) on limestone following the passage of the MMDR Amendment Bill, 2026. The move is expected to reduce input costs for cement companies and improve their financial performance.
The Tamil Nadu government had imposed an MBLT of ₹160 per tonne of limestone from April 4, 2025. Since limestone is a key raw material for cement production, the levy increased production costs for manufacturers sourcing the mineral in the state.
The change follows the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, which was passed by both Houses of Parliament on August 13, 2026. The amendment seeks to provide greater long-term stability to the major minerals sector.
Tamil Nadu Cement Makers to Benefit
The withdrawal of the limestone tax is expected to provide financial relief to cement manufacturers with significant operations or limestone requirements in Tamil Nadu. According to an analysis by Equirus Securities, the move could result in annual savings of around ₹500–600 crore for five key Tamil Nadu-focused cement companies.
Companies including Ramco Cements, India Cements, Dalmia and Chettinad are expected to benefit from the cessation of the levy. Ramco Cements is projected to be the largest beneficiary among the companies assessed.
The companies had incurred substantial additional costs after the tax was introduced. According to the report, Ramco Cements, India Cements, Chettinad and Dalmia together paid more than ₹500 crore in MBLT during FY26.
A cement industry official cited in the report said the levy had increased limestone costs and affected company margins. The tax also contributed to higher cement prices in South India, although some of the price increases were subsequently rolled back.
MBLT Had Increased Limestone Costs
The Mineral Bearing Land Tax was notified by the Tamil Nadu government at ₹160 per tonne of limestone. The levy came into effect in April 2025 and added to the cost of an important raw material used in cement manufacturing.
According to the industry estimates cited in the report, the levy resulted in an increase of approximately ₹150 crore in limestone costs for FY26 compared with the previous year for one cement manufacturer.
The withdrawal of the tax is therefore expected to reduce the cost burden on cement producers. The benefit could be reflected in improved margins, depending on factors such as cement prices, fuel costs, freight expenses and other operating costs.
The development comes at a time when cement manufacturers continue to face pressure from elevated fuel and crude oil prices. Lower limestone-related costs could provide some relief against these expenses.
MMDR Amendment and State Powers
The MMDR Amendment Bill, 2026, amends the Mines and Minerals (Development and Regulation) Act, 1957. The amendment does not remove the rights of states over land and minerals or affect taxes that states have already collected.
According to the report, around 90% of total taxes and statutory payments from mining currently accrue to states, and this arrangement will continue. The amendment also does not affect the authority of states to regulate and impose taxes on minor minerals.
The change concerning limestone taxation is particularly relevant for cement manufacturers because limestone is essential for clinker and cement production. Tamil Nadu has several cement companies with significant exposure to local limestone resources.
The cessation of the MBLT could improve the cost position of Tamil Nadu-focused cement producers. The expected savings may support margins and provide companies with greater flexibility in managing pricing and operating costs.
For manufacturers that had incurred hundreds of crores in MBLT payments during FY26, the removal of the levy represents a direct reduction in the cost associated with limestone procurement.
The move could also influence the competitive position of cement companies operating in Tamil Nadu and other South Indian markets. However, the extent to which consumers benefit through lower cement prices will depend on market conditions and the pricing decisions of individual manufacturers.
With the MMDR amendment now providing relief from the limestone tax, Tamil Nadu cement makers are expected to see an improvement in their cost structure. For companies such as Ramco Cements, India Cements, Dalmia and Chettinad, the change could translate into significant annual savings and support margins in the coming financial years.
