N4S: 

Rare earths and critical minerals are crucial for India’s clean energy, defence, and economic future. 

UPSC often frames broad questions – like on energy security or sustainable development and asks aspirants to link them with India’s raw material needs, as seen in the 2013 PYQ on atomic energy. But many stop at listing reserves or miss the global context. 

This article bridges that gap with updated facts and sharp themes – Import Dependency, Geopolitical Exposure, Strategic Urgency – and goes beyond just naming minerals to explain why they matter, from EVs to national security.

PYQ ANCHORING:

GS 1 :  With growing scarcity of fossil fuels, the atomic energy is gaining more and more significance in India. Discuss the availability of raw material required for the generation of atomic energy in India and in the world. [2013]

MICROTHEMES: Energy

China’s recent decision to restrict exports of rare earths has raised alarms for India’s electric vehicle (EV) sector, which depends heavily on imported critical minerals. Although India has good reserves of minerals like cobalt and rare earths, it has not invested enough in exploring or processing them. As India aims to become the world’s third-largest economy, building strong domestic capabilities in mining and processing will be crucial to secure its mineral supply chains and reduce foreign dependence.

Key Highlights

1. China’s New Export Caps:China has imposed export restrictions on rare-earth metals like neodymium, essential for manufacturing high-performance EV motors 
2. India’s Heavy Import Dependence: India currently imports ₹1,200 crore worth of neodymium magnets, mainly from China. Recently, imports by major suppliers like Sona Comstar were blocked.
3. China’s Global Dominance: Though relatively abundant, rare-earth metals are hard to process. China leads in refining and exports – it controls nearly 98% of some elements.
4. Domestic Exploration Efforts: India has the fifth-largest rare-earth reserves but faces a 3-5 year lead time to begin mining.
5. Strategic Urgency: With export licenses stalled and companies like Hyundai warning of shortages, disruptions in EV production are imminent.
6. Trade-Offs of Mining: While rare-earth mining is environmentally hazardous, the article asserts India must develop its own capabilities due to its strategic necessity.

China’s Rare Earth Export Curbs: Implications for India’s Strategic Mineral Security

Aspect	Explanation	Examples
Import Dependency	India heavily depends on imports of critical minerals like neodymium, lithium, cobalt, and gallium—especially from China.	India imports 100% of neodymium magnets from China; over 70% of lithium imports come from China.
Processing Infrastructure Deficit	India has rare earth reserves but lacks domestic processing and separation capacity, relying on China’s dominance in mid- and downstream stages.	India holds the 5th largest reserves of rare earths, yet China processes 85–90% of the global rare earth supply.
Vulnerability of Key Sectors	Disruption in rare earth supply threatens EVs, electronics, and defense production.	Sona Comstar (EV motor supplier) reported shipment halts due to China’s curbs. India’s EV sales projected to reach 1 crore units by 2030.
National Security Risks	Rare earths are used in high-end defense tech—missiles, radar, aircraft—which are critical for national security.	India imports critical materials for Tejas fighter jets, BrahMos systems; 50% of titanium used in defense is imported.
Economic & Industrial Impact	Input costs for EVs, semiconductors, and solar manufacturing could rise, hurting Make in India goals.	India’s $10 billion Semiconductor Mission and IndiaAI Mission rely on imported gallium and indium.
Geopolitical Exposure	Over-reliance on China gives it strategic leverage in trade or diplomatic disputes.	In 2010, China halted rare earth exports to Japan during a territorial dispute; similar risks now loom for India amid border tensions.

Role of critical minerals in India’s growth story

Role	Explanation	Examples
1. Driving Renewable Energy Expansion	Critical minerals like silicon, tellurium, and rare earths are essential for solar panels and wind turbines, key to achieving India’s clean energy goals.	India aims for 50% non-fossil power by 2030. Solar capacity reached 64 GW (2024); wind expected to rise from 42 GW to 140 GW by 2030.
2. Powering Electric Mobility Revolution	Lithium, cobalt, and nickel are vital for EV batteries. India’s EV growth depends on stable supply of these minerals, especially lithium-ion battery components.	India imports 100% of lithium and cobalt; over 70% of lithium from China. These are critical for schemes like FAME II and EV production targets.
3. Strengthening Electronics & Semiconductor Manufacturing	Gallium, germanium, and indium are required for chips and advanced electronics. These are key to self-reliance in AI, telecom, and computing technologies.	India’s Semiconductor Mission and IndiaAI Mission depend on these minerals. India recently joined the Minerals Security Partnership to secure such inputs.
4. Enhancing National Security and Defence Capability	Minerals like titanium and rare earths are used in fighter jets, missiles, and defence electronics. Ensuring their supply is crucial for strategic autonomy.	India has over 50% import reliance on titanium. Rare earths are used in radar and navigation. A centralized auction system for strategic minerals is underway.
5. Fueling Economic Growth and Employment	Developing domestic mineral value chains creates jobs and boosts regional industries, reducing the trade deficit.	Under the Critical Mineral Mission, India will train 10,000 workers and run 1,200 exploration projects by 2031. Companies like Vedanta and Ola Electric are investing.

Evaluation of India’s current policies to reduce import dependence

1. Domestic Magnet Manufacturing Incentives: India has introduced policy incentives to encourage domestic production of rare-earths. However, these facilities are still in development and full-scale production is years away. This suggests that while the policy direction is right, its impact on reducing current import dependency is limited in the short term.

2. MMDR Reforms and Critical Mineral Mission: The government has amended the Mines and Minerals (Development and Regulation) Act and launched the National Critical Mineral Mission with a dedicated budget. These efforts aim to improve exploration and streamline auctions for 30 critical minerals. While these measures help formalize a framework, actual progress on the ground is constrained by poor geological data, slow environmental clearances, and limited mining infrastructure.

3. International Partnerships: India has entered into agreements with countries like Australia, Kazakhstan, and Sri Lanka to diversify its supply sources. Through the Mineral Security Partnership, India is seeking alternatives to Chinese dominance. However, these partnerships are at an early stage and have not yet translated into significant commercial imports or long-term contracts that ensure security of supply.

4. Strengthening Processing Infrastructure: India has expanded facilities like those run by IREL and proposed Production Linked Incentives (PLI) for rare-earth recycling and processing. Although this marks a shift towards self-reliance, the country still lacks the advanced refining infrastructure and scale enjoyed by China, which processes over 80 percent of global rare earths.

5. Offshore and Deep-Sea Mining Initiatives: India has initiated auctions for deep-sea and offshore mining blocks rich in critical minerals. These ventures are meant to tap into unexplored reserves and reduce foreign dependency. However, operationalizing these projects will take time due to technical challenges, lack of expertise, and the environmental sensitivity of such activities.

6. Governance and Institutional Capacity: New frameworks like reverse bidding and fast-track environmental clearances have been introduced to attract private players. However, industry observers point to delays in auction processes, a lack of investment-ready mineral data, and bureaucratic uncertainty as major obstacles. Despite reforms, effective implementation remains inconsistent.

Way Forward

1. Accelerate Domestic Exploration: Fast-track 1,200 mineral projects using AI and satellite tech. Prioritise states like Odisha, Rajasthan, and Andhra Pradesh.
2. Develop Processing Capacity: Set up rare earth processing hubs with PLI schemes. Encourage IREL expansion and global JVs.
3. Attract Private Investment: Offer tax breaks, fast clearances, and mining incentives under the amended MMDR Act to boost private participation.
4. Secure Overseas Supplies: Use Mineral Security Partnership (MSP) to invest in lithium and cobalt mines in Australia, Chile, DRC, etc.
5. Promote Recycling: Launch schemes for battery and e-waste recycling. Support startups with soft loans and R&D grants.
6. Build Skilled Workforce: Train 10,000+ workers in mining and metallurgy via IITs, ISM Dhanbad, and global tie-ups.

#BACK2BASICS: Critical Minerals

Critical minerals are a category of non-fuel minerals and elements which satisfy 2 conditions:

1. Economic development & National Security = Essential for economic development and national security as they are vital for development of materials for defense, aerospace, nuclear, and space applications.
2. Supply chain vulnerability = There are associated risk of supply chain vulnerability and disruption with these minerals, due to their lack of availability, and concentration of existence, extraction or processing of these minerals in few geographical locations.

Factors Affecting Criticality:

Source- Ministry of Mines

Critical Minerals identified in India: Government of India identified 30 minerals as Critical in July 2023.

Antimony Beryllium Bismuth Cobalt Copper Gallium Germanium Graphite Hafnium Indium

Lithium Molybdenum Niobium Nickel PGE Phosphorous Potash REE Rhenium Silicon

Strontium Tantalum Tellurium Tin Titanium Tungsten Vanadium Zirconium Selenium Cadmium

Importance of Critical Minerals for India

1. Economic Growth Boost: Critical minerals power sectors like electronics, telecom, transport, and defense—driving jobs, innovation, and income.
Example: India’s semiconductor push depends on mineral access.

2. Clean Energy Transition: They are essential for solar panels, wind turbines, and EV batteries—crucial for India’s net-zero target by 2070.

3. Building Value Chains: Domestic mineral discovery enables tech-linked value chains and attracts FDI under China+1 strategies.
Example: UK and US interest in India’s mineral sector.

4. Strengthening National Security: Used in defense, aerospace, and nuclear sectors for durable, high-performance materials.

5. Cutting Import Dependence: India relies heavily on imports. Boosting domestic production lowers the import bill and Current Account Deficit.

Challenges with Critical Minerals

1. Geopolitical and Market Monopoly
Critical minerals are concentrated in a few countries, leading to geopolitical control and oligopolies.(Example: Australia controls 55% of lithium; China holds 60% of rare earths.)

2. China’s Processing Dominance
China leads globally in refining—holding 60% production and 85% processing share—giving it leverage over supply chains.(Example: China’s recent rare earth export restrictions affect global EV production.)

3. Geopolitical Instability
Political unrest or conflict in mineral-rich areas disrupts supply.(Example: Civil war in DRC threatens cobalt supply—70% of global reserves lie there.)

4. Resource Nationalism
Countries are tightening control over their mineral wealth, increasing trade barriers.(Example: Growing resource nationalism in Africa affects long-term contracts.)

5. Price Volatility
Lack of transparent trading and poor data cause unpredictable pricing and deter investment.(Example: Sudden spikes in lithium prices due to unclear supply data.)

6. Import Dependence
India’s critical mineral imports rose 34% from FY22 to FY23, risking energy and industrial security.(Example: Rs 91,000 crore spent on imports in FY23 alone.)

7. Environmental Impact
Mining harms ecosystems through water use, pollution, and land degradation.(Example: Lithium mining in Chile’s Atacama desert causes water scarcity.)

8. Delay in Alternatives
Setting up alternative sources or refining capacities takes years.(Example: India-Australia mineral partnership may take over 15 years to become fully functional.)

Govt. Initiatives 

Amendment to Mines and Minerals (Development and Regulation) Act, 1957	Through the MMDR Amendment Act, 2023, the Central Government is empowered to auction blocks of 30 critical minerals. The amendment permits private sector entry through auctions.
FDI liberalisation	In 2019, India has allowed 100% foreign direct investment. Certain minerals which were previously classified as atomic have been reclassified, facilitating private-sector mining.
International Collaboration	India joined the Mineral Security Partnership,  which is a US led initiative involving 13 countries and the EU. Khanij Bidesh India Ltd (KABIL) is assisting Argentina in lithium exploration and discussing lithium and cobalt blocks in Australia.
Institutional Initiatives	The Geological Survey of India has initiated over 250 projects to explore deep-seated critical minerals. India has launched startup challenges to develop advanced processing technologies.
Budgetary Support	Customs Duty Removal: Customs duties on 25 critical minerals, such as lithium, nickel, copper, and cobalt, have been removed to enhance domestic manufacturing of advanced technologies like electric vehicles (EVs) and energy storage systems. Concessional Customs Duty Extension: The concessional customs duty of 5% on lithium-ion cells has been extended until March 2026.
Critical Mineral Mission	In the Budget 2024, Critical Mineral Mission has been announced to give a boost to India’s critical minerals Sector. Through this mission, India aims to boost the domestic output and recycling of critical minerals like copper and lithium.

Significance of Critical Mineral Mission:

1. Promotion of domestic production and recycling of critical minerals by increasing the capacities of India in terms of refining and processing. 2. Identification of minerals which are critical, which will help the country to plan for the acquisition and preservation of such mineral assets taking into account the long term need of the country. 3. Reduction of India’s import dependency as India is 100% import dependent for certain elements. 4. Expedited exploration, overseas mineral acquisition, resource efficiency, recycling of minerals, and finding substitutes through suitable R&D.

Source- Ministry of Mines

Way Forward

1. Implementation of the recommendations of expert committee on critical minerals: Setting up of the Centre of Excellence for Critical Minerals (CECM) as a dedicated wing in the Ministry of Mines. This can be on the lines of CSIRO which is an Australian government corporate entity. The centre of excellence can collaborate with international agencies or Khanij Bidesh India Ltd (KABIL) for the strategic acquisition of foreign assets of these minerals.

2. Push for expansion of Mineral Security Partnership (MSP): Along with India, more countries in the Global South can be part of the alliance, especially critical mineral-rich African countries. The MSP can become an international platform that reports on the status and future of critical mineral markets.

3. Encourage FDI in domestic mining: Rising Foreign Direct Investment (FDI) will not just support businesses like battery and EV manufacturing. It will also bring the expertise of international mining firms to aid in exploring critical minerals for the country’s benefit.

4. Investment in beneficiation and processing facilities: India should invest in beneficiation and processing facilities in Africa to promote local economies and sustainable relationships.

5. Path to global leadership: India can emulate Indonesia’s success in nickel to become a global leader in these minerals, utilizing access to both domestic and international raw materials.

6. Alignment of mineral incentives: The Production-Linked Incentive (PLI) scheme for minerals should align with global aspirations, creating employment opportunities.

SMASH MAINS MOCK DROP

India’s ambition for clean energy, digital self-reliance, and strategic autonomy hinges on securing critical mineral supply chains. In this context, critically examine India’s policies to reduce import dependence on critical minerals.