The shift of critical minerals to India’s strategic centre
The Union Budget has highlighted India’s new ‘mineral resolve’
360° Perspective Analysis
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Context
India's strategic focus has shifted towards critical minerals, recognizing them as essential for industrial, energy, and geopolitical goals. The government's introduction of the in the Union Budget, with a significant outlay, underscores a move from policy formulation to execution, aiming to build expertise in exploration and processing to secure supply chains.
UPSC Perspectives
Economic
The transition to clean energy and advanced technology relies heavily on critical minerals, making them vital for economic sovereignty. The government's strategy focuses on creating domestic demand for processed minerals to incentivize investment in midstream processing, a capital-intensive sector. The removal of import duties on capital goods for processing and tax deductions for exploration expenditure for specific minerals are key policy levers to improve the competitiveness of domestic industries. However, the lack of assured demand remains a hurdle. A robust domestic manufacturing ecosystem for batteries, solar modules, and electric vehicles is crucial for backward integration and establishing secure supply chains, reducing reliance on dominant players like China. This aligns with the broader goal of Atmanirbhar Bharat (self-reliant India).
Geographical
The distribution and processing of critical minerals are highly concentrated geographically, creating significant supply chain vulnerabilities. China currently dominates the global processing capacity for many critical minerals, posing a geopolitical risk. India's approach involves identifying and exploring its domestic reserves, such as lithium, which was previously restricted under the atomic minerals list. The facilitated the entry of private players into the exploration and mining of deep-seated and critical minerals. Furthermore, India is seeking to establish rare earth corridors along coastal states and leverage existing infrastructure to meet both domestic and global demand, highlighting the strategic importance of geographical location and resource endowments.
Governance
Effective governance is critical for translating ambition into mineral security. This requires a coordinated approach across ministries and proactive state leadership. The aims to streamline exploration efforts, targeting 1,200 projects by FY2031. Implementing an AI-first approach, leveraging initiatives like the and the , can significantly enhance exploration efficiency and prospectivity analysis. Furthermore, building strategic international partnerships through platforms like the and free trade agreements is essential for technology transfer and establishing resilient supply chains. Regulatory certainty and robust legal frameworks are necessary to attract global investments and foster collaboration in this critical sector.