The Union Cabinet of India has approved a new mines and mineral development and regulation (MMDR) bill, which will force mining companies to compensate people affected by mining activities.

According to the new bill, coal mining companies will have to share 26% of the profits from their mines with people affected by projects, reports Press Trust of India.

The new law will also require payment of an amount equivalent to royalty paid to the state government to project-affected persons in the case of non-coal mining companies.

The bill also compels the mining firms to pay a 10% excess to state governments and 2.5% to the centre on the total royalty paid.

Mines Secretary Vijay Kumar said that the profit and royalty shared by miners would be deposited in a mineral development fund created in every district, to be spent on the local population and area development.