Introduction

Critical minerals are the foundation of contemporary industrial economies. There is no universal definition of critical minerals. Each country has identified its own set of critical minerals. Based on the criteria of economic importance and supply risk, India has identified 30 critical minerals[i]. These minerals are vital for economic development and national security because of irreplaceable usage in sectors like electronics, solar panel, windmills, electric vehicles, aerospace, defense, space, chemicals and fertilizers, etc. Global reserves of these minerals are concentrated in only a few countries while processing of critical minerals like nickel, cobalt, lithium and Rare Earth Elements (REE) is dominated by China. 

Recognising the vulnerabilities posed by undiversified supply chains and realising the rising demand for critical minerals from digital and clean energy industries, countries are taking efforts to secure an uninterrupted supply of critical minerals. The European Union’s Critical Raw Materials Act, the Inflation Reduction Act of the United States, the Minerals Security Partnership and the proposed critical minerals deal between US and Ukraine are few initiatives which highlight the growing importance of critical minerals. A successful critical mineral strategy develops each stage of the critical mineral value chain – mineral exploration, mining and extraction, intermediate processing, refining, advanced manufacturing and recycling end-of-life products. This approach fosters favourable backward and forward linkages throughout the value chain, establishes markets for raw materials, and ensures the domestic manufacturing of high-value products.

Steps Taken by India

India does not have significant known reserves of many critical minerals. It is 100 per cent dependent on imports for critical minerals such as lithium, cobalt and nickel but it does have the 5th largest reserve of REE. India established Khanij Bidesh India Limited (KABIL) in 2019 with the mandate to identify, explore, acquire and develop critical and strategic mineral assets overseas for supply to India. Since then, KABIL has signed agreements with state owned enterprises of Australia, Argentina and Chile to source lithium and increase cooperation in the field of critical minerals.

To increase availability of critical minerals and give a push to related downstream manufacturing in India, the Union Budget 2024 eliminated basic customs duty levied on 25 critical minerals and reduced it for two of them[ii]. In the Union Budget 2025, customs duty on cobalt powder and on waste and scrap of lithium-ion battery, lead, zinc and 12 critical minerals[iii] were eliminated. This measure aims to boost recovery of critical minerals from end-of-life products. A policy for recovering critical minerals from tailings will be introduced. Tailings are the waste minerals left after target minerals are extracted from the ore.

India has also launched its National Critical Mineral Mission (NCMM) with an outlay of Rs 34,300 crore spread over seven years. The Union government will contribute Rs 16,300 crore, while Rs 18,000 crore will come as investment from PSUs like KABIL, Coal India Limited (CIL), Indian Rare Earth Limited (IREL), Steel Authority of India Limited (SAIL), ONGC Videsh Limited (OVL) etc. 

NCCM has two broad objectives – to secure India’s critical mineral supply chain and strengthening the value chains. The mission will encompass all stages of the critical mineral value chain. Boosting domestic production, acquiring assets abroad, creating stockpile of critical minerals and providing financial incentives for increasing recovery of critical minerals from overburden and tailings are some components of the mission. Adopting a whole-of-government approach, the mission will work closely with relevant ministries, PSUs, private companies, and research institutions to achieve its objectives.

While steps are in place to secure critical minerals, more efforts are required to develop processing and refining technology and downstream manufacturing of high-value products. The experience of China can be instructive in this regard. China used its monopoly in REE production and exports to bring in foreign direct investment in advanced manufacturing for electronics. After establishing monopoly in production and exports of REE, China gradually began to restrict supply of REE, compelling foreign firms to set up manufacturing facilities in China to ensure uninterrupted access to supplies of REE.

Dealing with Supply Chain Challenges in the Electric Vehicle (EV) Sector

Manufacturing an EV requires six times more minerals than manufacturing a conventional car. Higher demand for EVs will lead to rising dependence on China for lithium-ion batteries and critical minerals. Economic Survey 2024-25 points out that while the Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell manufacturing and setting up KABIL is a step in the right direction. There is more that needs to be done.

The Economic survey 2024-25 recommends creating a self-reliant ecosystem by increased R&D in battery technologies, such as sodium-ion and solid-state batteries. Securing intellectual property rights in this domain will be crucial to reap benefits. Financial incentive can be provided for manufacturing lithium-ion battery as most of the value addition happens in this stage. Investment in battery recycling infrastructure can be a long-term measure to reduce demand for virgin raw materials.

These measures can serve as a template for development of other sectors where critical minerals are utilized. Securing uninterrupted supply of critical minerals from domestic and foreign sources should be the first step. Processing and refining techniques can then be developed through domestic research and joint ventures with foreign firms. Manufacturing high-value products like semiconductors, displays, permanent magnets account for the largest value-addition. Incentives like the PLI scheme or tax concessions can be put in place to develop such manufacturing in India. Firms that utilize critical minerals in manufacturing can be nudged towards vertical integration in the value chain. These firms can fund upstream activities like extraction, processing and refining, getting assured supplies of desired raw material in return. Finally, recycling critical minerals from end-of-life products will create a circular economy and reduce demand for raw materials.

A robust critical mineral value chain will generate employment, growth and clean energy products, which will help India to meet its net zero target by 2070 and achieve Viksit Bharat status by 2047.

*Sauhard Kaushal is Research Assistant at RIS. Views expressed are personal. Usual disclaimer applies.
Author can be reached out at sauhard.kaushal@ris.org.in

[i]30 critical minerals identified are - Antimony, Beryllium, Bismuth, Cobalt, Copper, Gallium, Germanium, Graphite, Hafnium, Indium, Lithium, Molybdenum, Niobium, Nickel, PGE, Phosphorous, Potash, Rare Earth elements (REE), Rhenium, Silicon, Strontium, Tantalum, Tellurium, Tin, Titanium, Tungsten, Vanadium, Zirconium, Selenium and Cadmium

[ii] Table1: Critical mineral and custom duty reduction: Union Budget speech 2024

[iii] Table 3: Annexure of Union Budget speech 2025

References

Ministry of Finance, Government of India. (2024). Union Budget 2024 [Speech]. Government of India.

Ministry of Finance, Government of India. (2025). Union Budget 2025 [Speech]. Government of India.

Vashisht, P. (2021). Accessing rare earth elements and prospects for manufacturing (RIS Policy Brief No. 108). Research and Information System for Developing Countries.

Ministry of Mines, Government of India. (2023). Critical minerals for India: Report of the committee on identification of critical minerals. Government of India.

Ministry of Mines, Government of India. (2025). National Critical Minerals Mission Document [Report]. Government of India.

Vashisht, P. (2024). Strengthening India’s mineral security: From efforts to action (RIS Policy Brief No. 113). Research and Information System for Developing Countries.

Ministry of Finance, Government of India. (2025). Economic Survey 2024-25. Government of India.