The shift of critical minerals to India’s strategic centre

Three years ago, and at the start of India’s G-20 presidency, critical minerals barely featured as a strategic topic in policy thinking. As recently as August 2023, several critical minerals, including lithium, were still classified as atomic minerals, effectively barring private exploration and mining. But the latest Union Budget shows that something critical has shifted in India’s thinking.

The government has now signalled that critical minerals have moved to the mainstream, and must become a core pillar of India’s industrial, energy, and geopolitical strategy. The emphasis on ‘critical minerals’ in the Budget speech is revealing. The focus is no longer on whether India needs a critical minerals policy but on whether India can now execute while building expertise at scale, speed and depth.

Clear policy drive

There is clear policy momentum. India now has a list of 30 critical minerals and has eased mineral exploration for junior miners while also rationalising the royalty rates. In January 2025, the government launched the National Critical Mineral Mission (NCMM) with a budgetary outlay of ₹16,300 crore. Today, India is among a small group of countries with a comprehensive and ambitious policy framework for critical minerals.

Yet, ambition alone will not deliver mineral security. Execution will. It takes years — often decades — to discover and mine minerals, but extraction is not the only bottleneck. China controls up to 90% of global mineral processing capacity for several critical minerals. However, analysis by the Council on Energy, Environment and Water (CEEW) suggests that India already has the capabilities to process a few minerals to high purity levels.

For instance, Indian industries already produce high-purity copper, graphite, rare earth oxides, tin and titanium — often exceeding 99.9% purity. However, existing production is largely geared towards conventional uses and limited volumes. Meeting the requirements of clean tech and defence will require further technological upgrading, deeper refining, and capacity expansion. Skills from established sectors such as chemicals, pharmaceuticals and textiles could be leveraged to process raw minerals to higher purity and scale.

Priority areas

In this context, Budget 2026 begins the harder work of implementation. To sustain this momentum, India must double down on three priorities: First, create demand avenues for processed minerals. The Budget rightly removes import duties on capital goods used in the processing of critical minerals. Given high capex requirements, this improves the competitiveness of upcoming refineries. However, the biggest constraint investors face is not just cost but also the lack of assured domestic demand for processed minerals. While government initiatives support domestic manufacturing of batteries, solar modules, wind turbines, and electric vehicles, delays in backward integration continue to create uncertainty for midstream processors. Boosting the deployment of locally-made electric vehicles, batteries, solar, and wind would have powerful third-order effects, strengthening processing, mining, and exploration ecosystems. Demand creation remains the most decisive industrial policy lever.

Second, adopt an Artificial Intelligence (AI)-first approach to mineral exploration. The NCMM targets 1,200 exploration projects by FY2031. The Budget strengthens project viability by making exploration expenditure for nine critical minerals eligible for tax deductions. Interestingly, four of these minerals (beryllium, tantalum, lithium and niobium) were on the restricted atomic minerals list just three years ago. To truly de-risk exploration, leveraging technology will be critical. India should mandate an AI-first approach to mineral exploration, backed by coherence across the IndiaAI Mission, the National Geospatial Policy, and Mission Anveshan. Today, Mission Anveshan focuses on hydrocarbon discovery using seismic AI tools. Extending such capabilities to the National Geoscience Data Repository could significantly improve prospectivity analysis and aid new site discoveries.

Third, leverage geopolitical disruption to build technological sovereignty. In 2025, the weaponisation of rare earth magnets and battery supply chains exposed the fragility of global industrial and clean energy policies. The government’s response — announcing rare earth corridors across coastal States and reducing import duties on monazite sands — is timely. States should now leverage existing infrastructure and manpower to serve global demand, creating jobs and boosting regional growth.

International partnerships are key

But beyond local action, India should accelerate institutional and industrial partnerships with Australia, the European countries, Japan, the United Kingdom and the United States. Many of them possess advanced minerals processing or complex component manufacturing capabilities but remain cautious about technology transfer. These firms should be nudged and encouraged to set up their facilities in India to service global markets. While the ₹7,280 crore scheme for sintered rare earth permanent magnets is a start, regulatory certainty, water-tight legal frameworks, market access and research collaboration will be equally important. Strengthening links between centres of excellence in India to their global counterparts — such as through the UK-India Critical Minerals Supply Chain Observatory — should be prioritised, including under the recently concluded India-European Union Free Trade Agreement.

In a turbulent world, 2026 can be a year of accelerated ambition if approached with speed, confidence and caution. India’s leadership in critical minerals hinges on coordinated action supported by inter-ministerial coordination, proactive state leadership, and global partnerships.

Rishabh Jain is Fellow at the Council on Energy, Environment and Water (CEEW). The views expressed are personal

Published – February 27, 2026 12:08 am IST