What explains the shift in India’s approach towards critical minerals from a peripheral issue to a core strategic priority?

The shift in India’s approach reflects a structural transformation in the global political economy. Three years ago, several minerals such as lithium were classified as atomic minerals, limiting private participation. Today, with the launch of the National Critical Mineral Mission (NCMM) and a dedicated budgetary allocation of ₹16,300 crore, critical minerals are positioned as central to India’s industrial, energy, and geopolitical strategy.This change is driven by multiple factors: Energy Transition: Clean technologies such as EVs, solar panels, wind turbines, and batteries require lithium, cobalt, rare earths, and graphite.Geopolitical Risks: China’s dominance of nearly 90% of global processing capacity exposed vulnerabilities in global supply chains.Strategic Autonomy: Technological sovereignty in defence and high-tech manufacturing depends on secure mineral access.Thus, the policy evolution reflects a move from regulatory caution to strategic assertiveness, integrating mineral security into India’s long-term development and national security framework.

India's Strategic Shift Towards Critical Minerals

Q: Why is execution considered the biggest challenge in India’s critical minerals strategy?

Ambition without execution cannot ensure mineral security. Mining projects typically require years of exploration, environmental clearances, infrastructure creation, and capital mobilisation. Even after extraction, refining and processing capacity remains a major bottleneck, especially given China’s overwhelming dominance in mineral processing.Although India already produces high-purity copper, graphite, rare earth oxides, tin, and titanium (often above 99.9% purity), current capacities are largely geared toward conventional sectors and limited volumes. Clean technology and defence manufacturing demand higher purity standards and larger scale.Therefore, execution challenges include: Technological Upgradation: Advanced refining capabilities.Skilled Workforce: Leveraging expertise from chemicals and pharmaceuticals sectors.Infrastructure and Logistics: Coastal corridors and processing hubs.Without timely capacity expansion and coordination, policy momentum may not translate into real supply chain resilience.

Q: Can you provide a real-world example of how geopolitical disruptions have influenced India’s mineral policy?

A significant example is the weaponisation of rare earth magnets and battery supply chains in 2025. Export restrictions and geopolitical tensions exposed the fragility of global clean energy and industrial supply chains.In response, India announced the development of rare earth corridors across coastal States and reduced import duties on monazite sands. These steps aim to leverage India’s coastal infrastructure and manpower to capture global demand in rare earth processing.This episode demonstrates how external shocks can catalyse domestic reform. It highlights the importance of technological sovereignty, diversification of supply chains, and proactive state-level participation in strategic sectors.

Q: Assume you are advising the government on strengthening international partnerships for critical minerals. What strategy would you recommend?

If advising the government, I would propose a multi-layered partnership strategy combining diplomacy, industrial policy, and research collaboration.First, deepen bilateral agreements with Australia, Japan, the EU, the UK, and the United States for supply diversification and processing technology access. The recently concluded India–EU FTA can be leveraged to facilitate technology flows and joint ventures.Second, incentivise foreign firms to establish processing facilities in India by ensuring regulatory certainty, robust legal frameworks, and market access. The ₹7,280 crore scheme for sintered rare earth magnets is a positive step.Third, strengthen institutional networks such as the UK-India Critical Minerals Supply Chain Observatory and promote collaboration between centres of excellence.Such a coordinated approach would position India not merely as a raw material supplier but as a global processing and manufacturing hub, reinforcing economic resilience and strategic autonomy.

The Union Budget reflects a new focus on critical minerals crucial for India's industrial and geopolitical future.

Gopi

•February 27, 2026•6 mins read

Critical Minerals: From Strategic Recognition to Execution-Driven Sovereignty

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1. Strategic Shift: Critical Minerals Enter India’s Core Policy Framework

Critical minerals have rapidly moved from being a peripheral concern to a central pillar of India’s industrial, energy, and geopolitical strategy. At the beginning of India’s G-20 presidency, the issue received limited strategic attention. However, recent policy measures and Budget announcements indicate a decisive shift in thinking.

As recently as August 2023, minerals such as lithium were classified as atomic minerals, restricting private exploration and mining. The removal of such restrictions signals a structural policy correction aimed at enabling private participation and accelerating resource development.

The Union Budget 2026 reflects this transformation. The policy discourse has evolved from questioning the need for a critical minerals strategy to focusing on execution capacity—building expertise at scale, speed, and depth. This marks a transition from conceptual policy formulation to implementation-led industrial policy.

The governance logic is clear: without assured access to critical minerals, India’s clean energy transition, defence manufacturing, and industrial competitiveness would remain vulnerable to external shocks. Delay in strategic positioning could lead to long-term technological and geopolitical dependence.

2. Institutional Architecture and Policy Momentum

India has established a structured policy framework for critical minerals. A list of 30 critical minerals has been notified, and exploration norms have been eased, particularly for junior miners. Royalty rates have been rationalised to incentivise investment.

In January 2025, the government launched the National Critical Mineral Mission (NCMM) with a budgetary outlay of ₹16,300 crore, placing India among a small group of countries with a comprehensive minerals strategy.

However, mineral security is not merely about identifying resources. It requires sustained exploration, extraction, processing, and value-chain integration—each of which demands technological capability and long-term capital commitment.

Policy announcements create enabling conditions, but mineral development cycles often span decades. Without consistent institutional support and regulatory certainty, early momentum may dissipate, undermining strategic autonomy.

3. The Processing Challenge: Reducing External Dependence

One of the most significant bottlenecks lies in mineral processing rather than extraction. China controls up to 90% of global mineral processing capacity for several critical minerals, making global supply chains vulnerable to geopolitical disruptions.

However, analysis by the Council on Energy, Environment and Water (CEEW) suggests that India already possesses partial technological capability. Indian industries produce high-purity:

Copper
Graphite
Rare earth oxides
Tin
Titanium

In many cases, purity levels exceed 99.9%. Yet, production volumes remain limited and are largely oriented toward conventional industrial uses rather than advanced clean-tech and defence applications.

Upgrading refining technologies, expanding scale, and integrating capabilities from sectors such as chemicals, pharmaceuticals, and textiles could strengthen India’s midstream position in the value chain.

Processing capacity determines real strategic leverage. Without high-purity refining and scaling capabilities, raw mineral availability alone cannot ensure technological sovereignty or supply chain resilience.

4. Demand Creation as the Core Industrial Lever

The Union Budget 2026 removes import duties on capital goods used in processing critical minerals, reducing capital expenditure burdens for upcoming refineries. However, cost reduction alone is insufficient to attract sustained private investment.

The primary constraint remains the absence of assured domestic demand for processed minerals. While India promotes domestic manufacturing of:

Electric vehicles (EVs)
Batteries
Solar modules
Wind turbines

delays in backward integration create uncertainty for midstream processors.

Expanding deployment of domestically manufactured clean technologies would generate stable demand, creating third-order effects across processing, mining, and exploration ecosystems.

Industrial ecosystems mature when upstream and downstream sectors grow simultaneously. Without predictable demand signals, processing investments may stall, weakening the entire mineral value chain.

5. AI-First Exploration Strategy

The NCMM targets 1,200 exploration projects by FY2031, signalling ambitious scaling of geological discovery efforts. Additionally, exploration expenditure for nine critical minerals has been made eligible for tax deductions.

Significantly, four of these minerals—beryllium, tantalum, lithium, and niobium—were previously classified as restricted atomic minerals, highlighting policy liberalisation.

To de-risk exploration, an Artificial Intelligence (AI)-first approach has been proposed. Integration across:

IndiaAI Mission
National Geospatial Policy
Mission Anveshan (currently focused on hydrocarbon discovery using seismic AI tools)

could enhance prospectivity analysis and site identification through advanced data analytics and geospatial modelling.

Exploration is capital-intensive and uncertain. AI-driven geological intelligence reduces risk, improves discovery rates, and accelerates decision-making. Failure to adopt technological tools may prolong discovery timelines and deter private investment.

6. Geopolitical Disruptions and Technological Sovereignty

In 2025, the weaponisation of rare earth magnets and battery supply chains exposed vulnerabilities in global industrial systems. Such disruptions underline the strategic dimension of mineral supply chains.

India’s response includes:

Announcing rare earth corridors across coastal States
Reducing import duties on monazite sands

These measures aim to strengthen domestic value addition and integrate coastal infrastructure into mineral processing ecosystems.

States can leverage existing manpower and infrastructure to service global demand, generating employment and regional industrial growth.

Critical minerals now intersect with national security, trade policy, and energy transition. Without domestic capacity, geopolitical shocks could derail industrial expansion and climate commitments.

7. International Partnerships and Technology Transfer

Domestic capacity must be complemented by strategic international partnerships. Countries such as:

Australia
European nations
Japan
United Kingdom
United States

possess advanced processing technologies and component manufacturing capabilities.

India must encourage these firms to establish facilities domestically, serving global markets. The ₹7,280 crore scheme for sintered rare earth permanent magnets is an initial step in this direction.

Beyond financial incentives, success depends on:

Regulatory certainty
Robust legal frameworks
Market access
Research collaboration

Institutional mechanisms such as the UK-India Critical Minerals Supply Chain Observatory and cooperation under the India-EU Free Trade Agreement can strengthen technological exchange and supply chain integration.

Mineral security is both national and international. Strategic partnerships diversify supply sources, reduce technological gaps, and embed India in trusted global value chains. Absence of collaboration may limit technological upgrading and market access.

8. Cross-Dimensional Relevance for UPSC

GS2 (Governance & Policy): Regulatory reform, Centre-State coordination, inter-ministerial convergence
GS3 (Economy & Environment): Industrial policy, clean energy transition, resource security, AI in exploration
International Relations: Supply chain resilience, strategic partnerships, trade agreements
Essay: Themes of technological sovereignty, resilience in a turbulent world, balancing ambition with execution

Conclusion

India has moved decisively from recognising the importance of critical minerals to constructing an ambitious policy framework. However, mineral security depends not merely on announcements but on execution—demand creation, technological upgrading, AI-enabled exploration, and global partnerships.

If implemented coherently, India’s critical minerals strategy can anchor industrial competitiveness, energy transition, and geopolitical resilience in an increasingly fragmented global order.

Quick Q&A

Everything you need to know

The shift in India’s approach reflects a structural transformation in the global political economy. Three years ago, several minerals such as lithium were classified as atomic minerals, limiting private participation. Today, with the launch of the National Critical Mineral Mission (NCMM) and a dedicated budgetary allocation of ₹16,300 crore, critical minerals are positioned as central to India’s industrial, energy, and geopolitical strategy.

This change is driven by multiple factors:

Energy Transition: Clean technologies such as EVs, solar panels, wind turbines, and batteries require lithium, cobalt, rare earths, and graphite.
Geopolitical Risks: China’s dominance of nearly 90% of global processing capacity exposed vulnerabilities in global supply chains.
Strategic Autonomy: Technological sovereignty in defence and high-tech manufacturing depends on secure mineral access.

Thus, the policy evolution reflects a move from regulatory caution to strategic assertiveness, integrating mineral security into India’s long-term development and national security framework.

Ambition without execution cannot ensure mineral security. Mining projects typically require years of exploration, environmental clearances, infrastructure creation, and capital mobilisation. Even after extraction, refining and processing capacity remains a major bottleneck, especially given China’s overwhelming dominance in mineral processing.

Although India already produces high-purity copper, graphite, rare earth oxides, tin, and titanium (often above 99.9% purity), current capacities are largely geared toward conventional sectors and limited volumes. Clean technology and defence manufacturing demand higher purity standards and larger scale.

Therefore, execution challenges include:

Technological Upgradation: Advanced refining capabilities.
Skilled Workforce: Leveraging expertise from chemicals and pharmaceuticals sectors.
Infrastructure and Logistics: Coastal corridors and processing hubs.

Without timely capacity expansion and coordination, policy momentum may not translate into real supply chain resilience.

Mineral exploration is capital-intensive and inherently risky. The NCMM targets 1,200 exploration projects by FY2031. To de-risk investments and improve discovery rates, India must adopt an AI-first exploration framework.

Artificial Intelligence can analyse geological, seismic, satellite, and geospatial datasets to identify high-probability mineral zones. For instance, Mission Anveshan currently uses seismic AI tools for hydrocarbon discovery. Extending such capabilities to the National Geoscience Data Repository could significantly enhance prospectivity modelling.

Integration across initiatives such as the IndiaAI Mission and the National Geospatial Policy would ensure data interoperability and evidence-based decision-making. This technological integration reduces uncertainty, lowers exploration costs, and accelerates discovery timelines — essential for strategic minerals like lithium, tantalum, and niobium.

While supply-side reforms such as easing exploration norms and reducing import duties are important, demand creation remains the most decisive industrial policy lever. Investors hesitate to establish refining facilities due to uncertain domestic demand for processed minerals.

Government initiatives promote domestic manufacturing of EVs, batteries, solar modules, and wind turbines. However, delays in backward integration weaken midstream processing incentives. If India aggressively scales deployment of locally manufactured clean technologies, it would generate stable demand for processed minerals.

Positive Effects:

Encourages private investment in refining and mining.
Strengthens domestic value chains.
Creates employment and technological spillovers.

Risks: Over-protectionism or inefficient subsidies may distort markets. Hence, demand-side measures must be balanced with competitiveness and export orientation.

A significant example is the weaponisation of rare earth magnets and battery supply chains in 2025. Export restrictions and geopolitical tensions exposed the fragility of global clean energy and industrial supply chains.

In response, India announced the development of rare earth corridors across coastal States and reduced import duties on monazite sands. These steps aim to leverage India’s coastal infrastructure and manpower to capture global demand in rare earth processing.

This episode demonstrates how external shocks can catalyse domestic reform. It highlights the importance of technological sovereignty, diversification of supply chains, and proactive state-level participation in strategic sectors.

If advising the government, I would propose a multi-layered partnership strategy combining diplomacy, industrial policy, and research collaboration.

First, deepen bilateral agreements with Australia, Japan, the EU, the UK, and the United States for supply diversification and processing technology access. The recently concluded India–EU FTA can be leveraged to facilitate technology flows and joint ventures.

Second, incentivise foreign firms to establish processing facilities in India by ensuring regulatory certainty, robust legal frameworks, and market access. The ₹7,280 crore scheme for sintered rare earth magnets is a positive step.

Third, strengthen institutional networks such as the UK-India Critical Minerals Supply Chain Observatory and promote collaboration between centres of excellence.

Such a coordinated approach would position India not merely as a raw material supplier but as a global processing and manufacturing hub, reinforcing economic resilience and strategic autonomy.