Scindia, who is on a two-day visit here, was welcomed by the Congress workers at the railway station after he arrived by Shatabdi Express.
Asked on illegal mining, the Congress leader said: "I am saddened by it and should be stopped. This was one of our election issues."
"We had openly protested against illegal mining during the previous BJP rule. What's unfortunate is it's still underway under the current (Kamal Nath-led) government.
"Strict action should be taken against those involved in it."
He even said if illegal mining does not stop, he would be compelled to "step into the issue".
The former Union Minister's name is being raised for the position of Madhya Pradesh Congress President. On this, he said "the party high command's decision would be final".
Scindia's visit to Gwalior comes amid internal bickering in the Congress party. On Tuesday, he took part in several programmes and looked quite "aggressive".
Sources told that chances of Scindia even leaving the party if he doesn't get the post himself or for a leader of his choice cannot be discounted.
When Congress came to power in Madhya Pradesh after 15 years, Scindia was confident of being called in to helm the new government. But state Congress chief Kamal Nath prevailed over the party leadership, which made him the Chief Minister.
A dejected Scindia was left licking his wounds. But now with the Congress looking for a new state party President, Scindia sees a chance for himself. Only that Kamal Nath wants his man in that seat.
Scindia has met Sonia Gandhi twice in this regard. Following his last meeting with the interim Congress chief, Kamal Nath was called to Delhi.
Meanwhile pro-Scindia faction leaders are openly threatening a revolt if he is overlooked in the state party chief's selection. State Congress leaders are holding dharnas and posters have cropped up across MP demanding Scindia as Madhya Pradesh PCC chief. In all these posters, Scindia's photo overwhelms miniature images of Sonia and Rahul Gandhi.
( With inputs from IANS )