Critical Mineral As Strategic Asset For India

Brief Context

India needs to accelerate its efforts in the global supply chain, as critical minerals are emerging as the defining geoeconomic axis of the 21st century.

Source Content

Syllabus: GS3/Economy; Science & Technology

Context

• India needs to accelerate its efforts in the global supply chain, as critical minerals are emerging as the defining geoeconomic axis of the 21st century.

About Critical Minerals

• These are the minerals that are essential for the production of modern technologies. They are important for national security and the economy.
• These minerals are labelled as critical because of their lack of availability (spatial distribution), methods of extraction or processing, and vulnerability and disruption in supply chains.
• These minerals impact the economy relatively higher than the other raw materials when the risk of supply shortage.

Global Landscape: Strategic Concentration and China’s Dominance

• These minerals are geographically concentrated, opaque supply chains, and complex midstream processing with China dominating the midstream processing stage — refining over 90% of rare earths, 70% of cobalt, and 60% of lithium.
  • It creates a strategic vulnerability for countries like India that rely heavily on imports.

India’s Position

• India is 100% import-dependent for several critical minerals, including lithium, cobalt, and rare earths.
• National Critical Mineral Mission (NCMM) aims to secure supply chains and reduce dependency. It includes:
  • Identifying 30 critical minerals (Ministry of Mines) essential for national security, economic development, and technological advancement, that are indispensable for:
    • Clean energy transitions (e.g., solar panels, wind turbines, EV batteries);
    • Digital infrastructure (e.g., semiconductors, smartphones);
    • National security (e.g., defense equipment, satellites)
  • Auctioning Mineral Blocks (five tranches completed);
  • Accelerating domestic exploration (422 projects in three years): India is rapidly expanding its exploration:
    • 195 projects completed in the past year
    • 227 projects approved for the current year

Key Challenges

• Refining and Processing Gap: The country remains 100% import-dependent for refining lithium, cobalt, rare earths, and other battery-grade materials.
• Strategic Risks and Industrial Vulnerabilities: China’s recent export restrictions on rare earths have already impacted India’s automotive industry.
  • Electric vehicle (EV) and internal combustion engine (ICE) production are both reliant on rare earth magnets, making supply security critical.
• Other Challenges:
  • High capital costs and limited processing capacity;
  • Lack of technically qualified bidders; domestic refining capacity; and shortage of qualified bidders
  • Midstream bottlenecks in refining and conversion

Strategic Solutions

• Establish dedicated mineral processing zones with modern infrastructure
• Offer Production-Linked Incentives (PLI) to attract private investment
• Develop a stockpiling framework to buffer against supply shocks
• ESG Compliance and Community Engagement: Sustainable mining is non-negotiable. Many critical mineral reserves are located in tribal belts, and ecologically sensitive zones.
  • India needs to adopt robust ESG frameworks, including third-party audits, transparent environmental assessments, and community benefit-sharing and consultation mechanisms.
• Towards Circularity and Sustainability: To reduce import dependency, India needs to build a circular economy for critical minerals:
  • Battery and electronics recycling must shift from informal to formal systems;
  • Investments in collection, dismantling and recovery infrastructure are necessary;
  • Incentives should be provided to recyclers to encourage participation.
• Strategic Alignment and Institutional Support: Effective policymaking will require:
  • Ongoing demand-supply assessments;
  • Dynamic reassessment of the critical minerals list;
  • Technological foresight to adapt to changing industrial needs.

Global Alliances and Friendshoring

• India’s international efforts include joining the Mineral Security Partnership; and forging bilateral ties with Australia, Argentina, and others.
• Geopolitical platforms like the QUAD and G20 should be leveraged to diversify supply chains; build joint ventures; and enable best-practice sharing.
• Additionally, India needs to establish a critical mineral stockpiling framework to buffer against shocks.

Road Ahead

• India’s ambitions for technological sovereignty and clean energy leadership hinge on its ability to secure critical minerals. It requires:
  • Timely execution of policies;
  • Sustained institutional support;
  • Strategic alignment with foreign policy goals

Source: IE