Context
- India’s ambition to emerge as a global leader in clean energy and sustainable growth hinges on its ability to secure critical minerals such as lithium, cobalt, and Rare Earth Elements (REEs).
- These minerals form the backbone of modern technologies, electric vehicles (EVs), solar panels, wind turbines, and energy storage systems, that drive the global transition towards low-carbon economies.
- As India targets 500 GW of renewable energy capacity by 2030 and net-zero emissions by 2070, ensuring a stable supply of these minerals has become a strategic and economic imperative.
The Importance of Critical Minerals in India’s Green Transition
- Lithium and cobalt are key components of EV batteries, and India’s EV market is projected to grow at an impressive 49% compound annual growth rate (CAGR) from 2023 to 2030.
- Supported by government initiatives such as the Electric Mobility Promotion Scheme (EMPS) 2024, the demand for batteries and energy storage solutions is expected to surge.
- However, India’s near-total dependence on imports, almost 100% for lithium, cobalt, and nickel, and over 90% for REEs—poses significant vulnerabilities.
- The dominance of China, which controls about 60% of global REE production and 85% of processing capacity, further amplifies strategic risks and highlights the urgency of achieving self-reliance.
Initiatives by India in the Field of Critical Minerals
- India possesses significant untapped mineral potential, with lithium reserves identified in Jammu & Kashmir and Rajasthan, and REEs in Odisha and Andhra Pradesh.
- The National Mineral Exploration Policy (NMEP) 2016 and the Mines and Minerals (Development and Regulation) Act 2021 have accelerated exploration through private participation and advanced geophysical techniques.
- The Geological Survey of India’s discovery of 5.9 million tonnes of inferred lithium resources in J&K marks a pivotal step towards domestic production.
- Moreover, the auction of 20 critical mineral blocks in 2023, attracting both domestic and international investors, signals growing market confidence in India’s potential as a key player in the global mineral supply chain.
Investment and Industrial Policy in Mining
- Investment in domestic mining forms the cornerstone of India’s critical mineral strategy.
- Despite policy reforms, the mining sector’s contribution to India’s GDP, just 2.5% in 2022, lags far behind resource-rich economies like Australia, where mining contributes over 13%.
- The Mines and Minerals (Development and Regulation) Amendment Act 2023 has opened up private exploration, yet high operational costs, regulatory bottlenecks, and environmental challenges persist.
- To bridge this gap, there is need for streamlined licensing, financial incentives, and production-linked subsidies that can attract private capital and technology partnerships.
- The government’s National Critical Mineral Mission (NCMM), backed by a ₹34,300 crore plan, is a significant step towards integrating exploration, mining, processing, and recycling.
- State-backed enterprises like NMDC, IREL (India) Limited, and KABIL (Khanij Bidesh India Ltd.) are diversifying into critical minerals and overseas acquisitions to strengthen supply chains.
- However, the success of these initiatives depends on scaling private participation, technological innovation, and swift project execution.
The Path Forward for India to Build a Circular Economy
- A circular economy, focused on recycling, recovery, and reuse, is essential for resilience. India generates nearly four million metric tonnes of e-waste annually, but a mere 10% is formally recycled.
- This represents a massive opportunity to recover critical minerals from discarded electronics and batteries.
- The Battery Waste Management Rules, 2022 set ambitious recycling targets, yet implementation gaps and infrastructure deficits hinder progress.
- To overcome these barriers, India must modernise mining and processing infrastructure with mechanised equipment, automated plants, and efficient waste management systems.
- Public-private recycling hubs can accelerate technological innovation, lower costs, and reduce environmental damage.
- Integrating urban mining, recovering minerals from waste streams, into the broader critical mineral framework would both reduce import dependence and generate employment in green sectors.
Challenges and Policy Directions
- While India’s policy trajectory is promising, several persistent challenges.
- These include high exploration costs, regulatory delays, insufficient refining capacity, and weak enforcement of recycling norms.
- Moreover, geopolitical competition for resources underscores the need for diversified international partnerships.
- India must balance environmental sustainability with industrial expansion, ensuring that mining activities adhere to ecological and social safeguards.
- Strengthening research and development (R&D) in mineral processing and battery technology will also be vital to achieving technological independence.
Conclusion
- India’s clean energy transition, and its broader industrial transformation, depends on securing critical minerals through a dual strategy: developing domestic mining capacity and advancing a circular economy.
- The National Critical Mineral Mission, alongside policy reforms and international collaborations, provides a strong foundation for this effort.
- However, sustained progress will require robust state support, transparent governance, and public-private synergy.
- By operationalising mining leases, modernising recycling systems, and investing in innovation, India can not only meet its renewable energy goals but also establish itself as a global leader in the green economy.