After Reading This Article You Can Solve This UPSC Mains Model Questions:
Critical minerals are the new oil of the 21st century. Examine India’s evolving critical minerals strategy in the context of energy transition, industrial policy, and geopolitical competition. 15 Marks (GS-3, Economy)
Context
- The Union Budget 2026-27 marks a decisive paradigm shift: critical minerals are now positioned as a core pillar of India’s industrial, energy transition, defence, and geopolitical strategy.
- Just three years ago, during India’s G20 Presidency (2023), critical minerals were peripheral in policy discourse. Minerals such as lithium were still classified as atomic minerals, restricting private sector participation.
- This Budget speech’s emphasis signals that India has moved from “whether to have a policy” to “how to execute at scale, speed, and depth”. This aligns with Atmanirbhar Bharat, Viksit Bharat @2047, and Net Zero 2070 goals.
Understanding Critical Minerals
Critical minerals refer to non-fuel, non-ferrous metals and their compounds that are vital for the clean energy transition, advanced manufacturing, defence technologies, and digital economy. These minerals underpin essential technologies such as electric vehicles (EVs), batteries, solar panels, wind turbines, semiconductors, and rare earth magnets.
- India’s Official List (30 Minerals): Notified under the Mines and Minerals (Development and Regulation) [MMDR] Amendment Act, 2023 (a law streamlining mining auctions and private participation)-includes lithium, cobalt, nickel, graphite, rare earth elements (REEs) (a group of 17 elements like neodymium and dysprosium), beryllium, tantalum, niobium, tungsten, phosphorus, and others.
- Global Context: China dominates 60-90% of mining and processing capacity for over 20 critical minerals (per US Geological Survey [USGS] 2025 data); this exposes vulnerabilities, as seen in the 2025 rare earth magnet embargo and global battery shortages.
- Key Risks: Extreme price volatility, supply chain weaponization by dominant players, and escalating geopolitical tensions amid India’s net-zero by 2070 pledge and global decarbonization goals.
Why Critical Mineral Matters for India
The pursuit of critical minerals represents a strategic imperative for India, securing mineral security to bolster Atmanirbhar Bharat.
- Economic Security:
- Reduces 100% import dependence on key battery metals like lithium (sourced from Australia/Chile), nickel, and cobalt (from DRC/Indonesia).
- Boosts Production Linked Incentive (PLI) schemes, including ₹18,100 crore for advanced chemistry cells (batteries) and ₹24,000 crore for solar PV modules.
- Energy Transition:
- Enables achievement of 500 GW non-fossil energy capacity by 2030, as per India’s Nationally Determined Contributions (NDCs) under Paris Agreement.
- Powers flagship initiatives like PM Surya Ghar (rooftop solar for 1 crore households) and FAME-III (targeting 30% EV penetration in vehicle sales by 2030).
- Geopolitical Edge:
- Counters China’s 60-90% global monopoly in processing; strengthens QUAD Critical Minerals Initiative (Quadrilateral Security Dialogue: India, US, Japan, Australia for Indo-Pacific resilience).
- Enhances IPEF Supply Chain Pillar (Indo-Pacific Economic Framework: 14 nations for resilient trade) and aligns with India-Middle East-Europe Economic Corridor (IMEC) for diversified, secure sourcing.
Evolution of India’s Critical Minerals Policy
India’s approach to critical minerals has evolved rapidly from regulatory constraints to proactive strategy, driven by global supply risks and domestic ambitions.
- Pre-2023: Policy focus was limited, with many minerals like lithium under strict restrictions by the Atomic Minerals Directorate (AMD), barring private exploration and mining.
- 2023 Milestone: The Mines and Minerals (Development and Regulation) [MMDR] Amendment Act formally identified 30 critical minerals and opened doors for private sector exploration through competitive auctions.
- 2024-25: Government rationalized royalty rates to make mining viable and eased entry barriers for junior miners, encouraging early-stage investments.
- January 2025: Launched the National Critical Mineral Mission (NCMM) with a robust ~₹16,300 crore outlay to build end-to-end capabilities.
- 2026 Shift: Union Budget marks a pivot from policy ambition to implementation focus, emphasizing execution at scale, speed, and depth.
National Critical Mineral Mission (NCMM)
Launched in January 2025, the NCMM serves as India’s comprehensive, ambitious framework to achieve mineral self-reliance, placing the country alongside global leaders.
- Financial Outlay: ₹16,300 crore dedicated to exploration, processing, and R&D.
- Core Targets: Complete 1,200 exploration projects by FY2031; intensify surveys for deep-seated and hard-to-access minerals using advanced tech.
- Key Focus Areas: Auctioning Critical Mineral Blocks nationwide; funding R&D for mineral beneficiation (value addition) and recycling to minimize waste.
- Global Standing: Aligns India with elite policies like the US’s Inflation Reduction Act (IRA) (subsidies for clean tech minerals) and Australia’s Critical Minerals Strategy (export-focused partnerships).
Key Institutions Driving Mineral Scale-Up
These institutions form the backbone of India’s mineral ecosystem, enabling exploration, funding, acquisition, and tech integration for critical minerals.
| Institution | Role & Full Form |
| GSI | Geological Survey of India—national mapping, surveying, and primary exploration agency. |
| NMET | National Mineral Exploration Trust—funds regional/detailed surveys for non-fuel, non-atomic minerals. |
| KABIL | Khanij Bidesh India Ltd (JV of NALCO, HCL, MECL)—secures overseas mineral assets and equity stakes. |
| Mission Anveshan | AI-powered seismic tools for hydrocarbon discovery; expandable to critical minerals via National Geoscience Data Repository (NGDR)—centralized geological data hub. |
The Core Bottlenecks: Why Is India Vulnerable?
India faces severe challenges in securing these minerals:
- Extreme Import Dependency: India is 100% dependent on imports for 10 out of 30 critical minerals, including lithium, cobalt, and nickel.
- China’s Processing Monopoly: Mining is not the main bottleneck; processing is. While India has some mining capabilities, China controls roughly 58% of global lithium refining, 65% of cobalt processing, and a staggering 87% of rare earth processing.
- Weak Domestic Demand: Investors hesitate to build expensive processing plants in India because there are no guaranteed domestic buyers yet. The local manufacturing of batteries, EVs, and solar equipment is simply not expanding fast enough to absorb the processed materials.
- Technology Gaps: Deep mineral exploration is risky and expensive. India has been slow to adopt Artificial Intelligence (AI) and advanced geospatial tools for discovering new deposits.
India’s Master Plan for Critical Minerals Security: Integrated Strategy and Solutions
To secure these minerals, India is moving from policy announcements to integrated action across six key pillars:
A. Smarter Exploration (The NCMM)
- The Strategy: The government launched the National Critical Mineral Mission (NCMM) in 2025. Under this, the Geological Survey of India will conduct 1,200 targeted exploration projects by 2030-31.
- How it helps: By integrating AI and advanced data, India can speed up the discovery of local reserves, directly reducing reliance on imports.
B. Shifting Focus to Processing and Refining
- The Strategy: Shift from raw extraction to high-purity processing by removing import duties on capital goods for critical mineral processing (as per Union Budget 2026-27). Leverage existing capabilities in chemicals, pharmaceuticals, and textiles sectors for upgrading to battery-grade and defence-grade materials.
- How it helps: This directly attacks China’s monopoly, allowing India to refine its own battery-grade materials locally.
C. Building the Rare Earth Ecosystem (Corridors & Magnets)
- The Strategy: The 2026-27 Union Budget announced “Dedicated Rare Earth Corridors” in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These coastal states are rich in monazite sand, which contains rare earths. Alongside this, a ₹7,280 crore scheme will fund the manufacturing of 6,000 tonnes of permanent magnets.
- How it helps: Instead of exporting raw sand, these corridors will centralize mining, processing, and manufacturing in one place, creating an end-to-end domestic supply chain.
D. Creating Assured Domestic Demand
- The Strategy: Public policy must speed up the nationwide deployment of EVs, battery storage, and wind projects.
- How it helps: Creates predictable offtake for processed minerals, providing investor confidence to build midstream refineries and processing plants.
E. Forging Global Partnerships
- The Strategy: To break reliance on single suppliers, India is aggressively partnering with resource-rich nations:
- Russia: Moving beyond traditional oil and weapons, India and Russia are now collaborating on critical minerals. Russia has vast reserves of lithium and rare earths. They are sharing processing technology and building logistics networks like the Chennai-Vladivostok corridor.
- Brazil: Recently, India and Brazil signed an MoU focusing on rare earths. Crucially, this covers the entire “value chain”—from exploration and mining to recycling and refining.
- Global Assets: India’s state-owned joint venture, KABIL (Khanij Bidesh India Limited), is actively acquiring overseas mines, including securing lithium exploration blocks in Argentina and Australia.
- Use platforms like:
- UK–India Critical Minerals Supply Chain Observatory
- India–EU Free Trade Agreement
F. AI-First Approach to Mineral Exploration
- To accelerate discoveries and cut decades-long timelines, India must adopt a mandatory AI-first strategy for mineral exploration, integrating key national missions for seamless synergy. Aligns with NCMM’s 1,200 projects target by FY2031.
- Core Integration:
- IndiaAI Mission (national AI compute and talent hub for data-driven analytics).
- National Geospatial Policy (2022; enables high-res satellite/drone data for terrain mapping).
- Mission Anveshan (AI-powered seismic tools currently for hydrocarbon discovery; extend to critical minerals by linking with National Geoscience Data Repository [NGDR]—centralized geological database).
Conclusion
India has successfully moved critical minerals to the strategic center of its economic and defense planning. However, simply mining these materials will not secure our future. True success depends on building large-scale processing plants, rapidly growing our domestic manufacturing demand, adopting AI for exploration, and maintaining strong, diversified global partnerships.
