India’s Critical Minerals Strategy

The contemporary global economic order is undergoing a structural transformation, shifting from a carbon-intensive industrial paradigm to one defined by green energy technologies and advanced digitalization. At the heart of this transition lies a suite of metallic and non-metallic elements known as critical minerals. These resources, including lithium, cobalt, nickel, and rare earth elements, have become the new “oil” of the twenty-first century, serving as the indispensable building blocks for everything from electric vehicle batteries and wind turbines to semiconductors and high-precision defense systems. 

However, unlike the relatively distributed global oil markets of the past, the critical minerals value chain is characterized by an extreme geographical concentration of mining and, more crucially, processing capabilities. As nations scramble to secure these resources, a geopolitical divide has emerged, pitting a Western-led coalition, which now includes India, against the established dominance of the People’s Republic of China.

The Strategic Imperative of Critical Minerals in the Energy Transition

The strategic importance of critical minerals is directly linked to the global commitment to climate goals. The International Energy Agency (IEA) has highlighted that clean energy technologies require significantly higher mineral inputs compared to their fossil fuel counterparts. For instance, an electric car typically demands six times the mineral resources of a conventional internal combustion engine vehicle, while an onshore wind plant requires nine times more mineral resources than a gas-fired power plant. This exponential increase in demand has transformed mineral security into a core component of national energy security and economic stability.

India’s specific requirements are driven by its ambitious climate targets and industrial missions. The nation aims to achieve 500 GW of non-fossil fuel energy capacity by 2030 and reach net-zero emissions by 2070. These objectives are supported by specific programs such as the National Electric Mobility Mission Plan (NEMMP), which targeted the deployment of 6–7 million electric vehicles, and the push for 140 GW of wind energy capacity by 2030. Achieving these goals necessitates a stable and resilient supply of minerals that India currently lacks in sufficient quantities domestically.

Table 1: Strategic Sectoral Dependence on Critical Minerals in India

The Architecture of Chinese Dominance in Global Supply Chains

The primary driver for the formation of Western-led alliances like the Minerals Security Partnership (MSP) is the pervasive dominance of China across the critical minerals value chain. While mining operations for various minerals are distributed across multiple continents—lithium in South America, cobalt in the Democratic Republic of Congo, and nickel in Indonesia—the processing and refining stages are remarkably concentrated within China. China has successfully pursued a strategy of vertical integration, positioning itself as the “gatekeeper” for the high-purity materials required by advanced manufacturers.

The Processing Monopoly and its Strategic Leverage

According to the IEA’s Global Critical Minerals Outlook, China is the leading refiner for 19 out of 20 important strategic minerals, maintaining an average market share of approximately 70%. This concentration is even higher in specific segments; for example, China produces over 95% of the world’s battery-grade graphite and separates approximately 91% of global rare earth elements. This dominance in the midstream and downstream segments—refining, chemical conversion, and component manufacturing—provides China with significant strategic leverage, often referred to in political discourse as an “assassin’s mace” or a decisive tool for economic warfare.

Table 2: Comparative Analysis of China’s Market Share in the Mineral Value Chain

The implications of this concentration were underscored in 2023 and 2024 when China imposed export restrictions on gallium, germanium, and certain rare earth magnet technologies. These restrictions were viewed as a response to Western technology export controls, highlighting the vulnerability of global supply chains to geopolitical tensions. For India, these restrictions directly impact the domestic manufacturing of electric vehicles and high-tech equipment, reinforcing the need for a diversified supply strategy.

The Minerals Security Partnership (MSP): A Western Collective Response

In June 2022, the United States, along with several key allies, launched the Minerals Security Partnership (MSP). The MSP is not a formal treaty but a transnational consultative body designed to accelerate the development of diverse, sustainable, and resilient critical mineral supply chains. The partnership aims to leverage the collective diplomatic, financial, and economic weight of its members to support high-impact projects along the entire value chain, from mining to recycling.

Membership and the Evolution of the MSP Forum

The MSP has evolved from a founding group of 11 partners into a broader coalition that includes 14 countries and the European Union. India’s induction into the MSP in June 2023 was a significant milestone, as it remains the only developing country in the core partnership, positioning it as a bridge between the advanced economies of the West and the mineral-rich nations of the Global South.

Table 3: Current Members of the Minerals Security Partnership (MSP)

To engage more effectively with resource-rich nations that are not part of the core group, the MSP partners established the MSP Forum in 2024. The Forum serves as a platform for both policy dialogue and project facilitation, aiming to ensure that mineral-rich countries benefit from local value-addition and beneficiation.

Table 4: MSP Forum Members (Producer Nations)

Operational Mechanisms: Finance and ESG Standards

The MSP operates through two primary levers: the MSP Finance Network and a commitment to high Environmental, Social, and Governance (ESG) standards. The Finance Network brings together development finance institutions (DFIs) and export credit agencies (ECAs) to provide targeted support for strategic projects that might otherwise struggle to attract private capital due to high risk or long lead times. Furthermore, MSP projects are required to adhere to rigorous, internationally recognized ESG and labor standards throughout their lifetime, a requirement designed to distinguish Western-supported projects from the often opaque and environmentally damaging practices associated with competing global interests.

India’s Domestic Strategic Framework: The 30 Critical Minerals List

Recognizing its vulnerability to supply disruptions, the Government of India, through the Ministry of Mines, released its first-ever comprehensive report on critical minerals in June 2023. This report identified a list of 30 minerals essential for the nation’s economic development and national security. The identification process was based on a sophisticated three-stage methodology that evaluated minerals based on their economic importance and supply risk, largely adopting the European Union’s analytical framework.

Categorization and Methodology

The committee established by the Ministry of Mines analyzed the critical mineral strategies of various countries and sought input from diverse industrial stakeholders. The criticality of each mineral was determined by an empirical formula considering parameters such as:

1. Economic Importance (EI): Assessed the mineral’s contribution to core sectors like defense, energy, and telecommunications.
2. Supply Risk (SR): Evaluated global production concentration, political stability of supplier nations, and India’s own geological reserves.
3. Cross-Cutting Usage: Analyzed whether the mineral was essential for emerging technologies like artificial intelligence and green energy.

Table 5: India’s Official List of 30 Critical Minerals (2023)

Note: PGE refers to Platinum Group Elements; REE refers to Rare Earth Elements.

The Challenge of Import Dependency

A major highlight of the 2023 report was the identification of minerals where India has a 100% reliance on imports. This total dependency on foreign sources for minerals vital to the EV and defense sectors represents a significant strategic chokepoint.

Table 6: Minerals with 100% Import Reliance in India

National Critical Mineral Mission (NCMM) 2025: A Seven-Year Blueprint

To operationalize the findings of the 2023 report, the Government of India launched the National Critical Mineral Mission (NCMM) in early 2025. The mission is designed as a seven-year blueprint (spanning from 2024-25 to 2030-31) with a total proposed outlay of Rs 16,300 crore and an additional expected investment of Rs 18,000 crore from various stakeholders.

Core Mission Objectives

The NCMM adopts a “pit-to-product” strategy to secure the entire value chain of critical minerals. Its primary goals include:

• Domestic Exploration: Intensifying the search for critical mineral deposits within India. The Geological Survey of India (GSI) has stepped up its focus, taking up 195 exploration projects in the 2024-25 field season alone.
• Overseas Asset Acquisition: Empowering public and private sector companies to acquire mining and processing assets abroad, particularly in resource-rich nations like Australia, Argentina, and Chile.
• Processing and Refining Capacity: Strengthening India’s midstream segment. While India has experience in processing bulk minerals like iron and aluminum, it lacks advanced capacity for high-purity refining of lithium, cobalt, and REEs.
• Recycling and Circular Economy: Developing an incentive framework to recover minerals from secondary sources like e-waste and end-of-life batteries.
• Technological Innovation: Establishing seven Centres of Excellence (CoEs) at premier academic and research institutions to develop homegrown technologies for mineral extraction and processing.

Table 7: Designated Centres of Excellence (CoEs) for Critical Minerals (April 2025)

Legislative Reforms: The MMDR Amendment Act 2023

To facilitate private sector investment and streamline the mining process, the Indian Parliament passed the Mines and Minerals (Development and Regulation) Amendment Act, 2023, which came into effect on August 17, 2023. This legislation introduced structural changes that are critical for UPSC/JKAS aspirants to understand.

Declassification and Private Sector Entry

One of the most significant changes was the removal of six minerals from the list of restricted “atomic minerals.” These include lithium, beryllium, niobium, titanium, tantalum, and zirconium. Previously, only government agencies were permitted to mine these resources; the 2023 amendment declassified them, opening up opportunities for private companies to participate in their exploration and extraction.

The Exploration License (EL): A New Concession

The Act introduced a new type of mineral concession called the Exploration License (EL). This license is specifically designed to attract junior mining companies and encourage the exploration of deep-seated and critical minerals.

• Area and Duration: A single EL can cover an area of up to 1,000 square kilometers , with a total cap of 5,000 square kilometers for a single entity. The license is issued for five years, extendable by two years.
• Mechanism: The EL is granted through an auction process. Once the EL holder proves the existence of mineral resources, the state government must auction the mining lease within six months. The EL holder is entitled to a share in the auction premium paid by the eventual miner, providing a clear financial incentive for high-risk exploration.

Centralized Auctioning for Strategic Minerals

Under the new Section 11D, the Central Government is empowered to exclusively conduct auctions for 24 critical and strategic minerals listed in Part D of the First Schedule. This change was made to accelerate the pace of development and ensure a unified national strategy for minerals vital to the energy transition and defense. Crucially, while the Central Government conducts the auction, the mining lease is still granted by the State Government, and all royalty and premium revenues flow to the state exchequer.

Table 8: The 24 Critical and Strategic Minerals in Part D of the First Schedule (MMDR Act 2023)

Mineral Diplomacy and Overseas Acquisitions via KABIL

India’s international strategy for mineral security is centered on Khanij Bidesh India Limited (KABIL), a joint venture company formed in 2019. KABIL is owned by three Central Public Sector Enterprises (CPSEs) in a specific equity ratio: National Aluminium Company (NALCO) at 40%, Hindustan Copper Limited (HCL) at 30%, and Mineral Exploration and Consultancy Limited (MECL) at 30%.²⁶

Strategic Projects in Argentina and Australia

KABIL’s primary mandate is to scout for, acquire, and develop strategic mineral assets abroad, focusing initially on lithium and cobalt.

• Argentina: In January 2024, KABIL signed a landmark agreement with the state-owned company of Catamarca, Argentina. This agreement granted KABIL exclusivity rights to explore and develop five brine-type lithium blocks (Cortadera-I, VII, VIII, VI, and Cateo-2022-01810132) covering 15,703 hectares. As of late 2025, detailed “invasive” exploration is underway, with expectations of identifying grade and quantity within two years.
• Australia: KABIL signed an MoU with Australia’s Critical Mineral Office (CMO) in March 2022 to conduct joint due diligence on lithium and cobalt mining assets. Five target projects (two lithium and three cobalt) have been identified for potential long-term investment and off-take arrangements.
• Chile: KABIL has signed an NDA with the Chilean state-owned company ENAMI to explore brine-type lithium blocks and is also participating in Chile’s RFI for lithium extraction.

Broadening Global Collaboration

KABIL has also entered into a tripartite MoU with Oil India Limited (OIL) and ONGC Videsh Limited (OVL) for collaborative exploration abroad, and a separate MoU with the UAE-based International Resource Holdings (IRH) for global supply chain cooperation in September 2024. These partnerships reflect a whole-of-government approach to securing energy transition materials.

The Case of Jammu and Kashmir: The Reasi Lithium Reserve

For aspirants focusing on the JKAS exam, the status of the lithium discovery in the Reasi district is of paramount importance. In early 2023, the Geological Survey of India (GSI) announced the finding of an estimated 5.9 million tonnes of lithium resources in the Salal-Haimna area. However, the initial report was based on a G3 (preliminary) survey, which provides an inferred resource estimate rather than a proven reserve.

Auction Failures and Ongoing Exploration

The Central Government attempted to auction the Salal-Haimna lithium block twice, but the process was annulled in March 2025 because no bids were received. Potential investors expressed concerns regarding the technical quality and extractability of the lithium from the hard-rock (bauxite-associated) deposits.

• The Transition to G2 Exploration: To provide greater clarity and de-risk the project for private bidders, the government decided to conduct its own end-level exploration. Union Minister G. Kishan Reddy announced in November 2025 that the G2-level (advanced) exploration is currently underway and is expected to be completed by January 2026.
• Current Outlook: Preliminary findings suggest that the deposits may not be as extensive as initially presumed. A final decision on whether to invite private bidders or proceed with public sector extraction will be taken after the G2 report in early 2026.

Table 9: Status of Lithium Exploration in Reasi, J&K (as of Late 2025)

Urban Mining and the Circular Economy: Recovery from Secondary Sources

As primary mining faces environmental and geopolitical challenges, the concept of “urban mining” has gained traction. Urban mining is the process of recovering valuable materials from the built environment, discarded products, and industrial waste rather than extracting them from the earth. For critical minerals, this primarily involves recycling e-waste, lithium-ion battery scrap, and end-of-life vehicle parts.

Economic and Environmental Significance

Urban mining offers a dual benefit: it secures a domestic supply of critical minerals while significantly reducing the environmental footprint of resource extraction.

• Carbon Reduction: Reusing materials from urban mines can reduce embodied carbon in supply chains by up to 80% for certain metals compared to primary mining.
• Supply Chain Resilience: Urban mines are located close to production centers, shortening supply chains and reducing reliance on volatile international markets.

India’s Circular Economy Targets under NCMM

The National Critical Mineral Mission (NCMM) includes a dedicated Rs 1,500 crore incentive scheme for recycling. A draft framework is being designed to increase India’s capacity to process 75,000 tonnes of dead lithium-ion batteries, with a target to quadruple this capacity during the mission period.

The government has also eliminated import duties on waste and scrap of six critical minerals to further incentivize domestic recycling industries.

Geopolitical Paradigms: Friend-shoring and De-risking

The global competition for critical minerals has birthed a new set of strategic concepts that are essential for UPSC aspirants to define accurately.

• De-risking: Unlike “decoupling,” which implies a complete separation of economic systems, de-risking focuses on reducing critical vulnerabilities while maintaining trade relations. For the West and India, this means diversifying supply chains so that no single country (like China) can exert undue influence over their economies.
• Friend-shoring: This refers to the practice of relocating supply chains to countries that are allied or like-minded, particularly those that share democratic values and high labor/environmental standards. The MSP is the ultimate manifestation of friend-shoring in the minerals sector.
• Strategic Autonomy: For India, joining Western-led partnerships like the MSP is not an abandonment of its non-aligned heritage but a functional “multi-alignment” strategy. It allows India to access technology and capital from the West while acting as a voice for the Global South and securing its own path toward a green economy.⁷

Fiscal Policy and Economic Incentives: Royalty Rates

To facilitate the first-ever auctions of critical mineral blocks, the Union Cabinet chaired by Prime Minister Narendra Modi approved specific royalty rates for 24 critical and strategic minerals between 2022 and 2024. Before these amendments, the default royalty rate was 12% of the Average Sale Price (ASP), which was considered too high to attract private investment.

Table 10: Amended Royalty Rates for Strategic Minerals (First Schedule, Second Schedule)

These rates were set carefully: lower rates for minerals produced as by-products encourage companies to invest in the complex recovery processes needed for elements like gallium or selenium which often occur in small concentrations in other ores.

Environmental and Social Safeguards: The Strategic Consideration Exemption

In 2025, the Ministry of Environment, Forest and Climate Change (MoEFCC) introduced a significant policy shift by exempting mining projects for atomic, critical, and strategic minerals from public consultations. This decision follows the provision in the Environmental Impact Assessment (EIA) Notification of 2006, which allows the Central Government to exempt projects involving “national defense and security” or “other strategic considerations”.

Justification for the Exemption

The government argued that critical minerals are vital for:

1. Defense Infrastructure: Minerals like REEs are essential for sonar, radar, and precision-guided munitions.
2. Nuclear Power: Accelerated production of uranium and beach sand minerals is necessary for India’s nuclear energy program.
3. Climate Commitments: The urgency of meeting net-zero targets by 2070 requires “out of turn” consideration for these mining proposals.

While this policy aims to fast-track projects, it remains a point of debate regarding the balance between developmental speed and local community rights—a common theme for UPSC Mains essays on environment vs. development.

Conclusion: Synthesis of India’s Mineral Strategy

The global contest for critical minerals has forced India to adopt a sophisticated, multi-layered strategy. Domestically, the nation has moved from a restricted, public-sector-only model to an open, competitive framework established by the MMDR Amendment Act 2023 and the NCMM 2025. Legally, it has redefined minerals to prioritize those essential for national security and the green transition.

Internationally, India’s approach is defined by “friend-shoring” through the Minerals Security Partnership and proactive asset seeking through KABIL. This alignment with the West is not merely a tactical move against China’s dominance but a strategic necessity to secure the technologies and raw materials required for India’s own industrial and environmental future.

For aspirants, understanding the causal links—how China’s export controls led to Western alliances, and how those alliances influenced India’s domestic legislative changes—is key to mastering this topic for the Civil Services Examination. The upcoming G2 survey report on the Reasi lithium reserves in January 2026 will be the next major milestone in this ongoing narrative.