A Missing Link in India’s Mineral Mission

Introduction

India wants secure, low-carbon growth, but its critical mineral policy still focuses more on mining than on processing. Processing is the missing link that decides whether India remains a supplier of raw ores or becomes a builder of resilient, high-tech industries. Closing this gap is central to energy security, industrial competitiveness, and strategic autonomy.

What are critical minerals?

Critical Minerals: Critical minerals are a category of non-fuel minerals and elements which satisfy 2 conditions:

• Economic development & National Security: It is essential for economic development and national security as they are vital for development of materials for defense, aerospace, nuclear, and space applications.
• Supply chain vulnerability: There are associated risk of supply chain vulnerability and disruption with these minerals, due to their lack of availability, and concentration of existence, extraction or processing of these minerals in few geographical locations.

Significance of Critical Minerals for India

1. Push to India’s Economic Development: These Minerals give a push to India’s economic development as industries such as high-tech electronics, telecommunications, transport, and defense rely heavily on these minerals. Their growth can lead to job creation, income generation, and innovation in these sectors. For ex- India’s push to become semiconductor manufacturing hub rests on the availability of these minerals.
2. Energy transition towards Net-Zero Emissions: These minerals are the foundation of modern technologies like solar panels, wind turbines and advanced batteries, which will help in energy transition and would give a push to India’s goal of net-zero emission by 2070.
3. Competitive value chain establishment in India: The discovery of critical mineral wealth and identification of areas of their potential use in advanced technologies will help in establishing competitive value chain in India. This would help in attracting foreign direct investments from countries like UK, USA as part of their China+1 strategy.
4. National Security: These minerals are vital for defense, aerospace, nuclear, and space applications due to their usage in development of high-quality and reliable materials capable of withstanding extreme conditions and performing complex functions. These would help in bolstering India’s national security.
5. Reducing India’s import Bill: Currently most of the critical minerals are imported in India. The exploration and increased production of these minerals would help in reducing India’s import burden and Current Account Deficit.

Challenges with Critical Minerals

1. Geopolitical and oligopolistic monopoly: The concentration of critical minerals in few countries, has led to geopolitical monopoly with only a few countries dominating these mineral resources. This leads to oligopolistic (domination by a few large firms) markets. For ex- Australia controls 55% of lithium reserves, and China has 60% of rare earths.
2. China’s dominance in the processing and refining sector: China is a central player in the global critical mineral supply chains, particularly in processing and refining. It accounts for:

• 60% of worldwide production
• 85% of critical mineral processing, 70% of cobalt processing
• 90% of rare earth refining
• 60% of lithium conversion capacity.

China’s dominance in the critical mineral sector leads to its political leverage over other countries. It alone can bring the global EV industry to a halt by restricting the supply of rare earths – which is happening right now.

3. Geopolitical Risks: The geographical concentration of the these minerals makes them vulnerable to geopolitical risks. Geopolitical tensions, conflicts, trade disputes, or sudden policy changes in those regions can impact their supply. For ex- The civil war in Democratic Republic of the Congo, has affected the global supply chain of cobalt, as 70% of the world’s reserves of cobalt are located in DRC.
4. Resource Nationalism: The geographical concentration of these minerals has led to resource conflicts. This has increased resource nationalism, and trade fragmentation. For ex- Rising resource nationalism in Africa.
5. Price Volatility: Unlike oil, most critical materials are not widely traded on exchanges, and this limits opportunities to hedge against price volatility. Further, insufficient data on consumption, production, and trade of minerals causes uncertainty, price volatility and delays in investments.
6. Rising Import Bill: Between FY22 and FY23, there has been a 34% rise in imports of critical minerals, totaling nearly Rs. 91,000 crore. India’s heavy reliance on imports for these minerals, poses a risk to its industrial and energy security.
7. Environmental Concerns: Mining activities of these can lead to biodiversity loss, land use change, water depletion and pollution, waste contamination, and air pollution. For ex-Lithium mining in the fragile landscapes of the Chilean Atacama desert is water-intensive.
8. Long Gestation Period for Alternatives: Development of alternative sources and processing capabilities of critical minerals, like India’s plans with Australia, can take more15 years for fruition, delaying self-reliance.

Government Initiative to Strengthen Critical Mineral Supply Chain

1. Legal and policy reforms

• The government has amended the Mines and Minerals (Development and Regulation) Act (MMDR Act) to allow exploration licences, national auctions, and a mineral exchange.
• The National Critical Mineral Mission (NCMM), launched in 2025, aims to secure supplies and strengthen value chains from exploration to processing and recycling..

2. Exploration and resource mapping: The Geological Survey of India will undertake 1,200 exploration projects between 2024-25 and 2030-31. More than 100 critical mineral blocks will be auctioned, including offshore areas with polymetallic nodules.
3. Processing, recycling and secondary resources

• Measures include fast-track clearances, a new Exploration Licence, and Critical Minerals Processing Parks.
• Recovery from coal fly ash, tailings and red mud is promoted through relaxed rules, incentives and work with PSUs and State utilities.
• A ₹1,500 crore recycling scheme supports critical mineral recovery.

4. Overseas assets and partnerships

• India backs PSUs and private firms in acquiring assets abroad through funding, guidelines and inter-ministerial coordination.
• Khanij Bidesh India Limited (KABIL) lithium projects in Argentina and partnerships with Australia, plus the Australia-Canada-India Technology and Innovation Partnership, deepen supply-chain and processing cooperation.

5. Budgetary Support:

• Customs Duty Removal: Customs duties on 25 critical minerals, such as lithium, nickel, copper, and cobalt, have been removed to enhance domestic manufacturing of advanced technologies like electric vehicles (EVs) and energy storage systems.
• Concessional Customs Duty Extension: The concessional customs duty of 5% on lithium-ion cells has been extended until March 2026.

6. FDI liberalization: In 2019, India has allowed 100% foreign direct investment.

Certain minerals which were previously classified as atomic have been reclassified, facilitating private-sector mining.

7. Engagement with United Nation: India is engaging with the United Nations system on critical minerals, notably as a member of the UN Secretary-General’s Panel on Critical Energy Transition Minerals.

Way forward

1. Centralised National Authority for Critical Minerals: Set up a unified national authority to oversee exploration, overseas acquisition, processing and recycling of critical minerals. It should coordinate between ministries, PSUs, States and regulators, streamline decision-making, and align domestic and external policies.
2. Turn Centres of Excellence into innovation engines

• The nine Centres of Excellence under the National Critical Mineral Mission should focus on applied research that meets downstream industry needs.
• They must deliver processing technologies close to commercial readiness, with clear metrics on purity, recovery, cost and waste.
• Collaboration among IITs, NITs, CSIR labs, industry and think tanks should move innovations quickly from lab to market.

3. Unlock secondary resources and residues

• India generates over 250 million tonnes of coal fly ash each year, containing light and heavy rare earths. Pilot projects at CSIR and IITs show recovery is feasible.
• Embedding recovery units in processing parks, co-funded with PSUs and State utilities and backed by streamlined clearances from the Environment Ministry, can convert these waste streams into secure domestic supplies.

4. Build a specialised processing workforce

• The ₹100 crore National Critical Mineral Mission (NCMM) skilling allocation should support trainer programmes, diploma courses and updated curricula in academic and CSIR labs.
• Industry-led apprenticeships at existing refiners will help workers gain hands-on experience in hydrometallurgy and advanced refining.

This can create skilled jobs in mineral-rich states such as Odisha, Gujarat and Jharkhand.

5. De-risk investment and assure demand

• Distorted global prices discourage new entrants. India can use its planned mineral stockpile as a market-maker by offering long-term contracts, offtake commitments and price support to domestic producers.
• Key sectors such as defence, pharmaceuticals and electronics can be encouraged to source part of their needs domestically, giving processors stable demand.

6. 6. Integrate mineral diplomacy with processing capacity: Overseas mineral assets must be linked with strong domestic refining. High-purity processing can shift India’s external partnerships from raw-ore supply to co-investment models and strengthen India’s position in platforms such as G-20, BRICS and IPEF.
7. Encourage FDI in domestic mining: Rising Foreign Direct Investment (FDI) will not just support businesses like battery and EV manufacturing. It will also bring the expertise of international mining firms to aid in exploring critical minerals for the country’s benefit.
8. Path to global leadership: India can emulate Indonesia’s success in nickel to become a global leader in these minerals, utilizing access to both domestic and international raw materials.
9. Alignment of mineral incentives: The Production-Linked Incentive (PLI) scheme for minerals should align with global aspirations, creating employment opportunities.

Conclusion

Critical minerals can either remain a strategic vulnerability or become a foundation of resilient, high-value growth. India must move beyond exporting raw ores to building strong domestic capacity in processing, recycling, skills, technology and financing, supported by smart diplomacy and FDI. Aligning these efforts can secure supplies, lower import risks and support energy and security goals.

Question for practice:

Examine why critical mineral processing is the missing link in India’s mineral mission and how India can strengthen this stage to achieve strategic autonomy.

Source: The Hindu