THE GRANITE PERMIT TEST

 

BIZ MASALA  |  BUSINESS • ECONOMY • BEYOND

Will Telangana’s new royalty system stop revenue leakage?

By Murthy ASR  |  Biz Masala Signature Investigation  |  15 October 2026

ILLUSTRATIVE IMAGE • Granite quarry landscape; not represented as a photograph of a specific lease site

THE CENTRAL QUESTION  A switch to weighing granite in metric tonnes may make the royalty system easier to standardise. It will not, on its own, prove that every block is measured correctly, every permit matches its destination, or every rupee due is collected.

A rule change meets an old enforcement question

Telangana’s granite industry sits at the intersection of mineral extraction, transport logistics, export trade and public revenue. The state’s latest policy change addresses one part of that chain: from 1 November 2026, black and colour granite seigniorage fees are to be collected exclusively on a metric-tonne basis, replacing the earlier mix of tonne and cubic-metre rates. The Industries and Commerce Department’s reported G.O. Ms. No. 34 also distinguishes domestic movement from movement outside Telangana, and says a transit pass is valid only for the purpose for which it was issued. The Mines and Geology Department has been directed to operationalise an online permit module. [1]

This is a meaningful design change. Weight-based charging can improve comparability between consignments and reduce the need to translate between measurement systems. But the policy outcome will depend on the controls around the measurement: calibrated weighbridges, accurate tare weights, permit data that cannot be quietly altered, destination checks, and reconciliation between quarry output and dispatches.

The more consequential question is therefore not whether a new rate table exists. It is whether the state can demonstrate that the right quantity was assessed at the right rate, the fee was paid before dispatch, and exceptions led to recovery or enforcement.

The revised fee schedule

Rates reported in coverage of G.O. Ms. No. 34, announced on 13 October 2026 and stated to take effect on 1 November 2026: [1]

Granite category	Domestic (₹/MT)	Export (₹/MT)
Black granite	1,252	1,633
Colour granite	1,176	1,354

Rate chart based on published reporting; the underlying government order should be consulted for legal interpretation and any classification details.

The reported rule treats granite moved outside Telangana—whether to another Indian state or abroad—as “export” for this fee schedule, while granite moved within Telangana is classed as domestic. That definition matters because destination coding becomes a direct input into the amount payable. The permit must therefore reflect the real route and destination, not merely the first stop on a consignment’s journey. [1]

The ₹129-crore dues story—and what it does not prove

A September 2025 report on proceedings before the National Green Tribunal said the Mines and Geology Department had reported ₹129 crore in outstanding seigniorage and royalty dues connected to alleged unauthorised railway-rake transportation of granite blocks. The report described 381 demand notices: 197 had been closed and 184 remained pending at that point. The reported total had declined from ₹152 crore after partial payments. These are historical figures reported in 2025; they must not be described as the current balance without obtaining an updated departmental statement. [2]

Nor should the ₹129 crore be presented as a proven, final loss to the exchequer. A demand can be disputed, revised, stayed, partly paid or ultimately recovered. A forensic account must distinguish the amount originally assessed, the amount confirmed after appeal or adjudication, payments received, amounts stayed by courts or tribunals, and the balance that is legally recoverable today.

THE DOCUMENTS THAT MATTER For each demand notice: case number, lessee or transporter, quantity alleged, legal basis, original demand, penalty calculation, response filed, adjudication or court status, amount paid, recovery action and outstanding balance as at a stated date.

ILLUSTRATIVE IMAGE • Granite blocks on freight wagons; not a photograph of a cited consignment

A separate track: the alleged export-tax case

In March 2026, Telangana Today reported that the Chief Minister had ordered a CID probe into alleged granite-export tax evasion in Karimnagar. The report said an earlier Vigilance and Enforcement inquiry had identified alleged tax evasion of ₹124 crore involving nine agencies and recommended a five-times penalty, taking the reported total to ₹749 crore. It also described earlier Enforcement Directorate activity and said full recovery remained pending. These are allegations and reported investigative findings, not a substitute for the case files, final orders or a current recovery statement. [3]

This alleged export-tax matter is not the same as the ₹129-crore railway-rake dues reported in 2025. The amounts may concern different legal bases, periods, parties and proceedings. Combining them into one headline total would risk double-counting and misrepresenting the status of each case. The CID investigation’s current scope, the exact offences under inquiry, and any subsequent charges, closures or recovery orders should be verified directly before publication.

Where the permit chain can fail

ILLUSTRATIVE IMAGE • A granite truck at a weighbridge checkpoint; not an actual Telangana inspection

1. Quantity mismatch — A permit may record a quantity that differs from the actual load. Controls need independent weighing, calibration logs, vehicle identification and a traceable record of adjustments.

2. Destination mismatch — A pass issued for one purpose or destination may not match the final movement. The revised rules make permit-purpose validity explicit; enforcement needs route and destination reconciliation.

3. Split data systems — Quarry production, royalty payment, e-permit, weighbridge, rail consignment and export records may sit in separate systems. Cross-checks are useful only if identifiers and timestamps can be matched reliably.

4. Penalty without recovery — Issuing a notice is not the same as collecting money. A public dashboard should separate assessed, disputed, stayed, paid, written-off and recoverable amounts.

5. Weak audit trail — If officers can alter records without a durable log, a digital system can simply move discretion from paper to screen. Role-based access, tamper-evident logs and independent audits matter.

What we should demand from the government

·       Publish the full G.O. Ms. No. 34 and the implementation circulars, including the online module’s launch date and operating instructions.

·       Publish monthly totals for granite quantity permitted, weighed, dispatched, cancelled and assessed, split by black/colour granite and domestic/export destination.

·       Disclose the number of operational weighbridges, calibration frequency, exception flags and inspections conducted after 1 November 2026.

·       Provide a case-wise, date-stamped status of the historical ₹129-crore dues: assessed, contested, stayed, recovered and pending.

·       Clarify the status and scope of the CID probe into alleged granite-export tax evasion, with due regard to pending proceedings and the rights of those named.

·       Publish environmental inspection and compliance records for quarry clusters, including dust, water, blasting and rehabilitation conditions.

The public-interest test

A well-designed royalty system should be able to show a simple chain of evidence: stone extracted, quantity weighed, permit issued, fee paid, load dispatched, destination reached, and any discrepancy resolved. The government does not need to disclose commercially sensitive information to publish meaningful aggregate statistics and recovery status. It does need consistent definitions, auditability and a clear date for every number.

The November reform is an opportunity to make that chain easier to audit. The test will be whether the state publishes evidence of implementation and whether outstanding cases move from notices to legally sustainable outcomes and actual recovery. Until those records are available, it is too early to declare that revenue leakage has been stopped—or to claim that the new system has failed.

Reporting note & source file

This is a desk-based investigative feature prepared from published reporting and a preliminary source review. Generated quarry, checkpoint and rail-yard images are illustrative, not documentary photographs of named sites. No illustrative production or revenue time series is used. Figures are attributed to the reporting in which they appeared and are not represented as a current official audit.

1.       [1] Deccan Chronicle, “Telangana Shifts Granite Seigniorage Fee Exclusively To Metric Tonne System From Nov 1,” updated 13 October 2026. https://www.deccanchronicle.com/amp/southern-states/telangana/telangana-shifts-granite-seigniorage-fee-exclusively-to-metric-tonne-system-from-nov-1-1995592

2.       [2] The Times of India, “₹129cr granite dues: Karimnagar rake-transport cases head for recovery,” 9 September 2025. https://timesofindia.indiatimes.com/city/hyderabad/129cr-granite-dues-karimnagar-rake-transport-cases-head-for-recovery/articleshow/123772341.cms

3.       [3] Telangana Today, “Illegal granite export issue resurfaces in Karimnagar,” 30 March 2026. https://telanganatoday.com/illegal-granite-export-issue-resurfaces-in-karimnagar

4.       [4] Telangana State Mineral Development Corporation, “Mining GOs” portal (official repository; confirm whether G.O. Ms. No. 34 has been uploaded). https://tgmdc.telangana.gov.in/MINING_GOS_NEW

5.       [5] IndiaKanoon, M/S Sai Enterprises vs The State of Telangana, order dated 12 March 2025; illustrates disputes around granite block measurements, transit forms and royalty demands. https://indiankanoon.org/doc/89629079/

BIZ MASALA • THE BOTTOM LINE

The royalty rate is the rule. The permit, the weighbridge, the audit trail and the recovery record are the test.

MURTHY ASR  |  BIZ MASALA SIGNATURE INVESTIGATION