India stands at a crossroads in its quest for energy security and self-reliance, particularly concerning critical minerals essential for energy transition. The Centre’s initiative to provide financial incentives for research institutes and mining companies marks a significant stride toward developing a robust domestic critical minerals sector. This initiative, aimed at fostering innovation in extraction and beneficiation technologies, is a crucial step in reducing India’s dependence on imports and mitigating the risks associated with volatile international supply chains. For far too long, India has relied almost entirely on imports to meet its demand for critical minerals like lithium and rare earth elements.
These minerals are indispensable for the burgeoning electric vehicle (EV) industry and renewable energy technologies, which are pivotal to India’s commitment to achieving net-zero emissions by 2070. However, the journey to establishing a thriving critical minerals industry has been fraught with challenges. Previous attempts, such as the auctioning of lithium blocks in Jammu and Kashmir, were met with limited success due to factors like low mineral concentration and high extraction costs. Recognising these challenges, the Centre’s decision to invest more than Rs 400 crore in collaborations between research institutes and private companies is a pragmatic and forward-thinking approach. By providing up to 75 per cent of the funding for approved projects, the government is not only supporting technological innovation but also encouraging the development of tailor-made, case-specific extraction techniques.
This strategic move is expected to enhance the economic viability of mining operations and attract more investors to the sector. Furthermore, the emphasis on beneficiation – the process of improving the quality of mineral ores before processing them into metals – is particularly noteworthy. By focusing on this critical aspect of the value chain, India can significantly reduce waste and improve the overall efficiency of its mining operations. This, in turn, will make domestic critical minerals more competitive in the global market, strengthening India’s position as a key player in the energy transition landscape. The broader strategic implications of this initiative cannot be overstated. As countries worldwide compete for control over critical mineral supplies, India’s push to develop its domestic capabilities positions it as a significant player in the emerging market. This move aligns with the broader goals of the Indian government to enhance its strategic autonomy and reduce vulnerability to external shocks.
By securing a stable supply of critical minerals, India can better manage its energy transition and safeguard its economic interests. However, for this initiative to succeed, it is imperative that the government and industry stakeholders work in close collaboration. The development of a critical minerals industry requires not only technological innovation but also a supportive regulatory framework and adequate infrastructure. The government must also ensure that the environmental and social impacts of mining activities are carefully managed to prevent adverse effects on local communities and ecosystems. This initiative, if successfully implemented, will not only bolster India’s energy transition efforts but also enhance its strategic position in the global market for critical minerals.