Critical minerals are a strategic asset – India must not fall behind

Indian Express

2 days ago

Critical minerals are emerging as the defining geoeconomic axis of the 21st century. These are no longer peripheral to industrial development but lie at the heart of advanced manufacturing, clean energy systems, strategic technologies and national security. Energy transition, digitalisation and the pursuit of supply chain resilience are rapidly amplifying the demand for minerals such as lithium, cobalt, nickel, graphite and rare earth elements. Their availability and accessibility will determine the pace and quality of growth for all major economies.
Unlike fossil fuels, critical minerals are characterised by high geographical concentration, limited transparency and complex value chains. China dominates the midstream processing stage for most key minerals, accounting for over 90 per cent of rare earth refining, 70 per cent of cobalt processing and close to 60 per cent of lithium conversion capacity. These are not incidental advantages but outcomes of decades of strategic investment, policy coherence and state-backed industrial planning. With China 20 years ahead in the supply chain race, India cannot afford to anchor its future energy, mobility or technology aspirations on supply chains that remain opaque, concentrated and subject to political risk.
In 2022, the Ministry of Mines identified 30 critical minerals based on their strategic importance to clean energy and future technologies, high import dependence, domestic resource constraints and relevance for agricultural and industrial needs. In January, the National Critical Mineral Mission (NCMM) was announced to secure critical mineral supply chains by ensuring mineral availability. Its success will rest on how effectively it translates intent into action.
Currently, India is 100 per cent import dependent for lithium, cobalt, nickel, rare earth elements and silicon. At the same time, India's domestic resource base for critical minerals is underdeveloped. The Geological Survey of India has ramped up exploration, with 195 projects underway over the past year and another 227 approved for the upcoming year. In response to the inclusion of critical minerals in the Mines and Minerals (Development and Regulation) Act, the government launched four tranches of auctions for critical mineral blocks last year, and a fifth was concluded in January 2025.
However, the auctions revealed persistent challenges. A large number of blocks were annulled as high capital costs, limited domestic processing capacity and a shortage of technically qualified bidders dampened participation. These outcomes underscore the need for policy refinement to attract credible investment and build industry confidence in the viability of critical mineral development.
As India seeks to scale up domestic exploration, it must also confront a major structural limitation: Lack of sufficient capacity to refine and process minerals into battery-grade or component-ready materials. This midstream bottleneck risks locking the country into a dependence on foreign processors, especially for lithium, cobalt and rare earths. To address this, the NCMM plans to set up dedicated mineral processing zones with modern infrastructure. Within these, production incentives modelled on PLI schemes could be used to catalyse private investment into refining, separation and chemical conversion facilities.
Amid growing concern over mineral security, recent export restrictions on rare earth elements by China have also exposed the vulnerability of India's automotive sector, with some firms already indicating potential production cuts. Rare earth magnets are essential to electric and internal combustion vehicles alike. To mitigate this risk, India must accelerate investments in independent supply chains, including targeted exploration, processing capacity and strategic partnerships.
Given the demand intensity and India's current reserves, international engagement and friendshoring will be vital to the creation of a diversified and resilient supply chain. India has taken steps by joining the Mineral Security Partnership and initiating collaborations with Australia, Argentina and others. These partnerships signal a deeper alignment with global efforts to diversify supply chains away from China. India should leverage geopolitical platforms such as the Quad and G20 to secure further stable mineral trade relationships, promote joint ventures and facilitate best-practice sharing. Developing a critical mineral stockpiling framework will also be essential to buffer against supply disruptions and price volatility. These efforts must remain strategically aligned with broader foreign policy objectives.
India must also build domestic self-sufficiency in critical minerals through more sustainable and circular approaches. Recycling offers a promising path to reduce import dependency. The recycling chain for batteries and electronics is fragmented and largely informal. Without investment in formal collection, dismantling and high-efficiency recovery, circularity will remain aspirational. India must also prioritise resource recovery by incentivising recyclers and by expanding formal infrastructure for waste collection.
Sustainable mining practices and responsible sourcing of critical minerals are crucial. Several critical mineral reserves lie in tribal or ecologically sensitive areas where inadequate environmental, social and governance (ESG) compliance has led to delays, protests and legal challenges. India must adopt comprehensive ESG frameworks in mining, incorporating community trust-building and third-party audit mechanisms. Strengthening community participation through local benefit-sharing and decision-making will be key to fostering enduring community trust and support for mining activities.
Policymaking must be informed by rigorous, sector-specific assessments of future demand, supply and technological developments. India should periodically reassess its critical mineral list and adjust sourcing strategies in line with domestic and global shifts.
The contest for critical minerals will shape the contours of future economic resilience and technological sovereignty. India has the market scale, industrial ambition and diplomatic leverage to lead. It must now ensure timely execution, sustained institutional support and a clear commitment to self-reliance, sustainability and global alignment.
Kant is former G20 sherpa of India and former CEO of Niti Aayog and Chhina is a policy specialist — climate and energy