The ‘Critical Factor’ in India’s Clean Energy Ambitions

Pushing the Boundaries: The 5.9-Million Tonne Lithium Question

In February 2023, the Geological Survey of India (GSI) made headlines by identifying 5.9 million tonnes of inferred lithium resources in Jammu and Kashmir (Reasi district). The discovery was hailed as a game-changer for India’s renewable energy ambitions—lithium, often dubbed “white gold,” is indispensable for lithium-ion batteries powering electric vehicles (EVs) and energy storage systems. But let’s stop and ask: Is this monumental figure really the inflection point for India’s clean energy ambitions, or just a hollow victory?

Why This Breaks from the Usual Pattern

The identification of lithium reserves has redirected the spotlight to domestic mineral exploration—a policy area where announcements have always outpaced action. For decades, India’s mineral policy has been focused on bulk minerals like coal and iron ore, leaving strategic materials like lithium, cobalt, and rare earth elements (REEs) sidelined. However, the ₹34,300 crore National Critical Mineral Mission (NCMM), launched in 2024, stands as a calculable shift in priorities. Unlike generic energy policies of the past, NCMM explicitly targets the “value chain”—from exploration, processing, and refining to recovery and recycling.

There’s a marked departure in institutional mechanisms too. Agencies like Khanij Bidesh India Ltd (KABIL) now procure overseas mineral assets as part of a coordinated strategy to mitigate India’s nearly 100% import dependency on lithium and cobalt. But despite such initiatives, glaring gaps remain. The foundational issue is that Indian mineral governance has historically leveraged extraction far more effectively than processing or refining, making these shifts less robust than they appear.

The Machinery Driving Policy: Laws, Acts, and Institutions

The institutional apparatus behind India’s critical mineral push includes the Mines and Minerals (Development and Regulation) Act, 2021 (MMDR Act), which emphasizes private-sector participation and auctioning of minerals previously monopolized by state actors. Under this framework, states like Rajasthan, Odisha, and Andhra Pradesh have commenced advanced geological surveys. Yet implementation remains uneven. In J&K, where lithium reserves are located, operational mining leases have not been expedited, raising questions about procedural inefficiencies.

Meanwhile, the National Mineral Exploration Policy, 2016 laid the groundwork by promoting mechanized mining technology and geo-spatial mapping techniques. Complementing domestic efforts is KABIL’s mandate to acquire stakes in Australia and Latin America’s lithium mines—the world’s richest repositories. But acquisition alone doesn’t solve the issue of refining, which requires heavy upfront investments and cutting-edge technology. India processes almost none of the critical minerals it imports, despite possessing untapped REE deposits in Odisha and Andhra Pradesh.

Supply Chain Vulnerabilities: What the Data Signals

The government’s rhetoric about self-reliance sharply contrasts with India’s 90% import dependency for REEs and near-total dependency on external sources for lithium and cobalt. These deficiencies are amplified by China’s overwhelming dominance over the critical mineral sector—it controls 60% of global rare earth production and nearly 85% of refining capacity. Strategically, India positions its National Critical Mineral Mission against Chinese economic influence, but with limited bargaining power.

Consider India’s burgeoning EV market, projected to grow at an ambitious compound annual growth rate (CAGR) of 49% between 2023 and 2030 under initiatives like the Electric Mobility Promotion Scheme (EMPS), 2024. This growth necessitates scaling up battery production, yet the estimated market valuation of $2.8 billion (for battery storage in 2023) risks being choked by insufficient mineral inputs.

As for domestic reserves, the discovery of lithium in Jammu and Kashmir is promising but fraught with practical limitations. Mining activity in ecologically sensitive areas risks igniting backlash, while bureaucratic delays to operationalizing leases will compound output inefficiencies. Metals like nickel and potash, crucial to EV and fertilizer applications respectively, remain underexplored despite India’s claims of mineral-rich states.

Uncomfortable Questions: Pragmatism vs Policy Optimism

The Ministry of Mines projects lofty ambitions, but where is the evidence of implementation capabilities? The glaring absence of adequate refining facilities raises serious doubts about whether domestic reserves can be viably converted into usable end-products. For instance, processing lithium into battery-grade material requires advanced chemical plants, expensive technologies, and environmental safeguards—none of which are sufficiently operational here.

Additionally, institutional shortcomings plague resource management. India lacks an independent oversight body for critical minerals, unlike Australia’s Critical Minerals Facilitation Office. The NCMM budgeting of ₹34,300 crore is significant but insufficient when juxtaposed with China’s massive public-private investments across the mineral value chain. Oversight-focused reforms need to accompany budgetary allocations if material execution is to undergo meaningful transformation.

And what about sustainability? Mining cess, land acquisition, and ecological disruption are policy blind spots. While promoting a circular economy through e-waste recovery is vital, India’s recycling capacity remains primitive—recovering critical elements from discarded batteries and electronics remains a highly inefficient process, constrained by informal sector dominance.

The Comparative Anchor: Australia’s Proven Model

Australia provides a sharp contrast. Ranked as the world's largest lithium producer, Australia combines advanced geological surveys, strong fiscal incentives like production-linked subsidies, and stringent environmental regulations in crafting an effective mineral framework. The Critical Minerals Facilitation Office coordinates with private miners and refiners to bridge operational and processing gaps. Australia’s adherence to sustainability in extraction processes—backed by strict ESG (Environmental, Social, and Governance) benchmarks—stands as a model for India’s nascent policies. By comparison, India’s mechanized mining campaigns lack such safeguards, leaving environmental damage unchecked.

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