In a significant boost to India’s pursuit of a steady supply of critical minerals, the budget has unveiled the Critical Mineral Mission, which will be supplemented by slashed import duties on these vital resources.
Finance Minister Nirmala Sitharaman unveiled this ambitious mission to raise domestic production, encourage recycling, and support overseas acquisition of critical mineral assets.
The mission’s mandate is as broad as it is bold, encompassing advances in technology, workforce development, an extended producer responsibility framework, and a robust financing mechanism.
Critical minerals are the backbone of modern technology, powering everything from electric vehicles and solar panels to energy storage systems and data transmission hardware, yet their supply is susceptible to disruption.
The source of such minerals is geographically concentrated, notably graphite (China, 79 per cent), cobalt (Democratic Republic of the Congo, 70 per cent), rare earth (China, 60 per cent), and Lithium (Australia, 55 per cent).
The geographic concentration is even higher for processing, with China dominating across the board.
Geopolitically, the thrust on renewable energy and electric vehicles has set off a race to secure critical minerals and rare earths. The Economic Survey 2023-24 highlighted the challenges posed by India’s dependence on China for critical minerals.
In August 2023, India declared a list of 24 critical and strategic minerals in a first-of-its-kind exercise and put up 20 blocks of these minerals, including lithium and rare earth minerals (REEs), for auction, opening them to commercial mining by the private sector.
The announcement made regarding the Critical Mineral Mission is a step in the right direction and is anticipated to shield India from high import reliance and supply risks amid global geopolitical turbulence.
It promises to invigorate the critical minerals sector, attracting investment and fostering the development of technology partnerships and joint ventures crucial for processing and refining — areas currently dominated by China.
Moreover, the budget proposes a full exemption from customs duties for 25 critical minerals, such as lithium, cobalt, and copper, which previously faced duties between 2.5 per cent and 10 per cent.
Basic customs duties on graphite, silicon quartz, and silicon dioxide have been reduced to 2.5 per cent from 5-7.5 per cent.
“This will provide a major fillip to the processing and refining of such minerals and help secure their availability for these strategic and important sectors,” the Finance Minister said.
The sweeping reductions in customs duties and the strategic focus of the Critical Mineral Mission mark a crucial step forward, positioning the Indian industry to access minerals at more competitive prices, support domestic manufacturing, and enhance export competitiveness.
However, the ultimate success of these measures will depend on how quickly India can tap into and develop its own domestic reserves of critical minerals.