Policy Update
Gargi Bisht
Background
Critical minerals have emerged as a strategy priority for the World as we expand our energy transition, advanced manufacturing and defence capabilities. Minerals such as lithium, cobalt, nickel, graphite and rare earth elements (REEs) are essential inputs for electric vehicle batteries, renewable energy technologies, permanent magnets, electronics and semiconductors. Their importance, however, extends beyond their economic value. The concentration of mining, refining and processing capacity in a limited number of countries leaves downstream industries vulnerable to geopolitical disruptions, export restrictions and supply shocks.
India’s vulnerability is particularly significant because resource availability does not necessarily translate into supply security. A critical mineral must move through several stages before it becomes a usable industrial input: discovery and exploration, mining and extraction, refining and midstream processing, and manufacturing. Recycling of batteries, e-waste and industrial scrap provides an additional source of supply. Weakness at any one stage can therefore constrain the wider value chain. For India, building resilience requires not only identifying domestic resources and securing overseas assets, but also developing the processing, recycling and technological capabilities needed to convert these resources into usable materials.
India’s policy response began to take shape with the Mines and Minerals (Development and Regulation) Amendment Act, 2023. The amendment brought 24 critical and strategic minerals under Part D of the First Schedule of the MMDR Act and gave the Central Government the exclusive authority to auction mining leases and composite licences for these minerals. This marked a shift towards greater central coordination of critical-mineral resources.
Functioning
The Mines and Minerals (Development & Regulation) Act was amended in 2023, and it empowered the central government to solely be responsible for the auction of composite licenses and mining leases for certain critical minerals. Additionally the Exploration Licence was also put in place to solve the investment-risk problem in mineral exploration by creating a commercial incentive for specialised domestic, but more specifically foreign exploration companies to undertake high-risk exploration (reconnaissance and prospecting), particularly for critical and deep-seated minerals.
In February 2024, post the amendment of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDRA), the Ministry of Mines provided details of the first tranche of auctions for the 20 critical mineral and strategic mineral blocks, and along similar lines – exploration license for 29 critical and deep seated minerals was announced. By July 2024, 14 out of the 38 notified critical-mineral blocks had been successfully auctioned with 21 additional blocks notified for auction. The government was also simultaneously expanding domestic exploration through GSI and 22 notified private exploration agencies funded through the National Mineral Exploration Trust.
The National Critical Mineral Mission notified in 2025, seeks to strengthen India’s critical mineral supply chain by ensuring availability both domestically and from abroad. 24 critical minerals have been identified and an amount of around Rs 16,300 crore has been allocated to the mission with an additional Rs 18,000 crore expected from Public Sector Undertakings. In order to spur domestic exploration, the government has to undertake around 1200 exploration projects and also establish a fast track regulatory approval process for mineral expression and mining projects. Furthermore, to establish a circular economy, the mission will promote mineral recovery from red mud and fly ash, and also introduce an incentive scheme for setting up of mineral recycling centres.
In terms of domestic exploration and mining, the government subsequently expanded the auction pipeline. By June 2026, 56 critical and strategic mineral blocks had been successfully auctioned out of 88 blocks taken up by the Central Government, representing a success rate of over 63%. The expansion continued in July 2026, when the eighth tranche offered another 20 blocks across nine states, including blocks containing REEs, graphite, lithium, tungsten, gallium, titanium and molybdenum (Livemint, 2026).
Exploration is being undertaken by GSI and through the National Mineral Exploration and Development Trust (NMEDT). As of the latest government update, 777 NMEDT projects had been sanctioned at ₹3,828.52 crore of which 255 were critical-mineral projects. The government’s broader target remains 1,200 critical-mineral projects.
To strengthen recycling and secondary supply, the Union Budget 2025-26 eliminated customs duties on critical-mineral waste and scrap, reducing input costs for Indian recyclers and improving their global competitiveness. Separately, ₹100 crore has been approved under the Mission to pilot the recovery of critical minerals from overburden, tailings, fly ash and red mud through industry-academia-research collaborations.
In September 2025, a Rs. 1500 crore recycling scheme became operational with an approximate time duration of six years FY 2025-26 to FY 2030-31. The scheme provides 20% capital expenditure subsidy on plant, machinery, equipment and utilities, and of the operational expenditure subsidy, 40% will be paid in the second year and the remaining 60% will be paid in the fifth year, upon achieving threshold incremental sales (PIB, 2026).
In terms of International Sourcing – Khanij Bidesh India Limited (KABIL) was created to carry out identification, acquisition, exploration, development, mining and processing of strategic minerals overseas in order to ensure a consistent supply of critical minerals to the Indian domestic market. Amongst the significant work done by the venture is the January 2024 agreement with CAMYEN of Argentina wherein, KABIL was given the exploration and development rights over 5 lithium brine blocks in Catamarca.
Located in the Lithium Triangle Argentina possesses the second largest Lithium reserves in the world, and therefore, this collaboration seems significant for India’s critical minerals sector. Furthermore, there are 5 shortlisted projects with Australia at the due-diligence stage, and an engagement with ENAMI, a state owned mining company of Chile at the Non- Disclosure Agreement (NDA) stage (ORF, 2026). KABIL is also assessing opportunities in Brazil, Canada, Russia, Indonesia, reflecting India’s broader effort to diversify its critical mineral supply.
India’s international engagements have increasingly taken the form of both bilateral agreements and commercial partnerships. Key developments include the India-US MOU of October 2024 and the KABIL-IRH (UAE) MOU, which leverage US technological capabilities and the UAE’s technical and financial expertise to support the development of India’s critical-mineral value chain.
The IREUK Titanium Limited, an Indo-Kazakh joint venture between IREL and UKTMP (Kazakhstan) in 2024, signifies India’s positioning in the value chain. It utilises Odisha’s low grade ilmenite and with help of UKTMP’s technology convert it to high grade titanium. Highlighting the downstream approach to critical mineral security, this initiative leverages India’s domestic mineral resources in the international market and at the same time, assures a regular supply to Kazakhstan. (PIB, 2024)
India’s engagement has also expanded to multilateral critical mineral initiatives. In 2026, India joined the Pax Silica coalition, aimed at securing supply chains for silicon and other critical minerals essential for high technology and semiconductors industries. This complements its participation in initiatives like the Quad Critical Minerals Initiative Framework, indicating an approach that combines bilateral resource partnership with multilateral efforts.
Performance
Between 2023 and 2026, India has made substantial progress in building the institutional and upstream foundations of the critical mineral supply chain, however the evidence of supply chain creation remains more limited. The shift is visible first in domestic exploration, with the Geological Survey of India’s (GSI) exploration programme increasing from 127 in 2023-24 to 230 in 2025-26 (Ministry of Mines, Annual Report)
Source: Data from Ministry of Mines, Annual Report 2023-24, 2024-25, 2025-26
The Ministry of Mines in March 2025, reported a significant expansion in India’s identified resources of critical minerals through GSI exploration including 12.3 million tonnes of lithium, 310.94 million tonnes of rare earth elements, and 72.91 million tonnes of graphite (PIB, 2025). Additionally, by 2026, 56 critical mineral blocks have been successfully auctioned across seven tranches, with the seventh tranche marking a significant milestone, with critical minerals being auctioned for the first time in Gujarat, Uttarakhand and Telangana by the central government (PIB, 2026). Furthermore, the private sector has been heavily investing in improving capabilities like the Epsilon Advanced Materials investing $650 million in an EV manufacturing facility in North Carolina, US.
International sourcing has also expanded moderately, but it remains largely in the asset development stage. The 2025 MMDR Act was specifically amended to expand the mandate to support critical mineral expiration and mining in other countries (Ministry of Mines, Annual Report 2025-26). KABIL’s agreement in Argentina is arguably its most significant overseas initiative. However, the company has reported delays due to ‘limited expertise’ in processing lithium brine deposits, pushing back the start of lithium extraction by an estimated four to five years. Furthermore, KABIL’s Lithium project in Mali also has been put on hold due to recent socio-political instability (ET EnergyWorld, 2026). Therefore, the quest for diversification has seen some progress through diplomatic and exploratory initiatives, but no secured physical supply has been guaranteed or agreed upon.
Another sector witnessing acceleration is the recycling and private – sector participation. In 2024-25, 46 projects involving 11 Notified Private Exploration Agencies (NPEAs) were approved, including 31 critical-mineral projects; by 2025-26, 72 projects were sanctioned to NPEAs, of which 43 concerned critical minerals. Recycling also moved from research and pilot activity towards industrial policy, with the ₹1,500-crore scheme rolled out in October 2025 for recovery of critical minerals from secondary resources.
The scheme aims to recover lithium, cobalt, nickel and other strategic minerals from end-of-life batteries, electronic waste and industrial scrap, helping reduce India’s import dependence, and it has attracted commitments for 850 kilotonnes as against a target of 270 kilotonnes of recycling capacity. By April 2026, 58 entities had been approved with ₹5,000 crore of pledged investment. These figures indicate strong private-sector interest, although these numbers only indicate pledged capacity, and do not reflect the actual operational output, which is yet to be determined. (Ministry of Mines Annual Report 2025–26).
Emerging Issues
India’s critical-mineral strategy has expanded upstream exploration and resource access, but commercial-scale processing remains a major bottleneck. India lacks commercial-scale facilities for several important processing routes like electrowinning and high pressure acid leach to help extract minerals. The technological and capital intensity of processing, combined with limited domestic experience in advanced extraction technologies, continues to constrain the development of a competitive midstream industry.
India’s overseas strategy is exposed not only to geological and commercial risks but also to political developments in resource-rich countries. Supply from the Democratic Republic of Congo, for example, is exposed to political and security risks, while producing countries are increasingly seeking to retain greater value domestically through export restrictions and local-processing requirements. This creates a risk that India may secure access to mineral resources without securing reliable access to processed material. More broadly, protectionist policies and export controls adopted by major producing and processing countries are increasingly reshaping critical-mineral trade flows.
The public sector continues to play a disparate role across India’s critical-mineral ecosystem, particularly in exploration, overseas asset acquisition and rare-earth processing. The initial heavy regulations created a dominance by the public sector in critical minerals, eg. HCL solely controls 80% domestic copper reserves, thereby limiting entry of private players (Livemint, 2024) While institutions such as GSI, MECL, KABIL and IREL provide strategic capacity, excessive dependence on public-sector entities can limit the speed at which projects are developed and reduce private-sector risk-taking.The challenge is therefore to use public institutions to de-risk early-stage investments while creating space for commercially driven private participation.
Scaling domestic mining, processing and recycling will create environmental trade-offs. Critical-mineral extraction can involve significant land, water and waste-management requirements, while some deposits containing rare earths and other minerals may also involve radioactive materials. Processing facilities therefore require stringent environmental safeguards, and waste containment apparatus – that India currently lacks. India’s challenge will be to reduce regulatory and project-development delays without weakening environmental standards.
Despite progress in exploration, auctions and international partnerships, India remains highly dependent on imports for several critical minerals. NITI Aayog notes that minerals such as lithium, nickel, cobalt and rare earth elements face near-total import dependence, while processing capacity remains a particular weakness for several other minerals. This creates a fundamental distinction between building supply options and achieving supply security. India’s resource base and policy pipeline are expanding, but until domestic mining, processing, recycling and overseas assets begin supplying material at scale, the country’s vulnerability to external supply disruptions will remain.
Way Forward
Therefore, in the short run as well as the long run, strengthening the midstream processing seems to be of utmost importance. Therefore, the 7 centres of excellence recognised so far (four IITs, two CSIR, and one NFTDC) must offer certifications in hydrometallurgical processing, international project management, and ESG compliance – and aim at adding workers to the critical mineral sectors. Each CoE will operate as a hub and spoke model to leverage R&D in critical minerals. Therefore, funds must be allocated, sourced through government as well as private partnerships, to improve the technological capacity and machinery. Additionally, necessary waste containment methods (like green biosurfactants), and stringent environmental safeguards must be in place to safely process hazardous tailings and radioactive waste from rare earth element extractions.
Similarly, KABIL must be reformed. A report from the Standing Committee on Coal, Mines and Steel recommends a series of measures to strengthen KABIL. The panel recommended strengthening KABIL’s capital base, and preparing a long term financial sustainability roadmap with a clear timeline for revenue generation from overseas projects. On overseas acquisitions, a clearly defined implementation roadmap with milestones and periodic review of KABIL’s progress must be in place, additionally a clear sovereign de-risking framework must be in place for international acquisitions. Therefore, the panel argues for stronger finances, and private participation, mediated by the government through co financing, risk mitigation and quicker approvals (ANI, 2026)
Additionally, taking inspiration from the Japanese model following China’s export restriction in 2010, the government needs to go beyond merely passing legislation and provide private sector players with the security and incentive to invest. Chinese dominance in REE and the lack of offset provisions make such investment unviable and unattractive. The government should provide sovereign backing and encourage joint ventures to invest not only in prospecting but also processing capabilities and technology transfer from foreign nations. Therefore, state backed de-risking needs to be paired with private sector mobilization.
References
- QUESTION NO. 2312 CRITICAL MINERALS MINISTERIAL MEETING | Ministry of External Affairs , Government of India. (2026). https://www.mea.gov.in/rajya-sabha?dtl/40868/QUESTION_NO_2312_CRITICAL_MINERALS_MINISTERIAL_MEETING
- Gupta, M. D., & Gupta, M. D. (August, 2026). From delays to stiff competition, why India’s overseas critical minerals quest is hitting roadblocks. ThePrint. https://theprint.in/india/governance/from-delays-to-stiff-competition-why-indias-overseas-critical-minerals-quest-is-hitting-roadblocks/3016667/
- International Resource Holdings (IRH), KABIL (Khanij Bidesh India Limited), Oil India Limited (OIL), & ONGC Videsh Limited (OVL). (2024). MoU between International Resource Holdings (IRH) and OIL, KABIL, OVL. https://kabilindia.in/public/storage/resources/MoU%20between%20International%20Resource%20Holdings%20%28IRH%29%20and%20OIL%2C%20KABIL%2C%20OVL.pdf?utm_source=chatgpt.com
- ET EnergyWorld & www.ETEnergyworld.com. (August, 2026). India’s state-owned KABIL expects to start lithium production in Argentina in 4-5 years. ETEnergyworld.com.
- Chhillar, A. (May, 2026). Securing India’s Midstream Capacity by Processing Critical Minerals Overseas. ORF. https://www.orfonline.org/research/securing-india-s-midstream-capacity-by-processing-critical-minerals-overseas
- Parliamentary panel bats for stronger KABIL finances, processing capacity, private participation to secure critical minerals. (August 2026). ANI News. https://www.aninews.in/news/business/parliamentary-panel-bats-for-stronger-kabil-finances-processing-capacity-private-participation-to-secure-critical-minerals20260813111215/
- Annual Report 2025-26, Ministry of Mines (2026). https://mines.gov.in/admin/download/69945dabea1821771330987.pdf
- Annual Report 2024-25, Ministry of Mines (2025). https://mines.gov.in/admin/download/67b42e623b87e1739861602.pdf
- Annual Report 2023-24, Ministry of Mines (2024). https://mines.gov.in/admin/download/66d59f3550fab1725275957.pdf
About the Contributor
Gargi Bisht is a history postgraduate from Miranda House, specializing in medieval history. Her interest lies at the intersection of history, research, and public policy, exploring issues related to governance, society, development, and international relations.
Acknowledgement
The author would like to express sincere gratitude to the IMPRI team for providing this valuable opportunity along with the reviewers Anooran Bordoloi and Khushi for their valuable feedback.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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