India's Critical Minerals Ambitions Remain Underground

India has strong ambitions around critical minerals, and to that end has come out with some bold policy initiatives to secure a place on the global stage. However, discovery of these minerals is only the easiest part of the equation. The real challenge lies in extraction, refining and building industrial capability.

For most of the last decade, the global conversation has revolved around securing access to critical minerals, important for electric vehicles, batteries, clean energy and advanced defence systems.

As governments raced to identify lithium deposits, secure supply pacts for cobalt and graphite, and pursue discoveries of other crucial minerals, the focus is now on who owns the deposits and who has the capability to process and refine these minerals. India has made remarkable progress over the last few years and critical minerals which used to be a subject of academic discussions a decade ago, have now become a part of the country’s industrial policy, economic diplomacy and national security.

The government has identified 30 minerals as critical, amended mining laws to give the government more control over mining auctions, launched the National Critical Mineral Mission with a planned outlay of ₹343 billion and flagged mineral discoveries, encouraged overseas acquisitions through Khanij Bidesh India Ltd, cut royalties, and forged partnerships with countries such as Australia, Argentina and the United States. India is also part of the US-led Pax Silica initiative -- a strategic collaboration on critical minerals and related technologies, and concluded a bilateral framework with Washington. All of this points to genuine progress, but the challenges have just begun.

Policy announcements and mineral discoveries are essential for building industrial capability, but the gap between the two has been huge so far. The divide was reiterated by the International Energy Agency’s Global Critical Minerals Outlook 2026 released last month. Although the 370-page report doesn’t have a dedicated chapter on India, its conclusion could very well be applied to nations such as India. It notes that global investment in critical minerals fell 9% in 2025, even as prices of some elements like lithium, cobalt and several other strategic minerals rose sharply. The document also highlights that global mining capacity is rising much faster than refining. The challenge has thus shifted from finding minerals to developing processing units.

The numbers demonstrate this contrast. India’s dependence on imports of lithium, cobalt and nickel is 100%, while the country purchases about 90% of its rare-earth permanent magnets by quantity from China. On the domestic front, out of about 1,200 exploration projects planned under the critical minerals mission between 2024-25 and 2030-31, the Geological Survey of India took up about 200 projects in 2024-25. And only 56 of 88 critical and strategic mineral blocks have been auctioned, highlighting that private companies remain cautious about the sector. Two much-talked-about discoveries -- Gujarat's Amba Dungar and Rajasthan's Balotra -- have so far been established as in-situ resource estimates, rather than operating mines or refineries. Policy announcements show that India has moved quickly, but the process of extracting the minerals and transforming them for industrial use has only just started.

Practical Challenges
This should not be seen as a policy failure, but rather a result of structural and practical difficulties. Governments can help identify resources, make laws, launch missions and enter into partnerships, but they can’t eliminate commercial risks in ventures where the private sector’s participation is key.

Even as forecasts suggest that demand is likely to grow for decades, private companies are hesitating to pour a large amount of funds into projects that might start yielding results only after a decade. A modern critical minerals refinery also requires sophisticated technology (an area where China dominates), specialised engineers, and environmental clearances. Investors need to be confident that the market will remain viable in the long term and that they can compete with China. The challenge has simply moved from policy initiatives to economics and commercial viability. It’s not surprising that global investments fell despite a spike in prices. The IEA isn't saying investors doubt demand will grow. The real concern is whether the money will come back soon enough to be worth the risk.

The issue could be demonstrated by an example. India grows plenty of cotton, but no one wears cotton picked directly from the fields. The commodity has limited commercial value until it’s cleaned, spun and woven into cloth. The real value is in cotton’s transformation, not in the raw material. Similarly, finding rare earth and other critical minerals is only a start. The value and leverage lie in the processing and manufacturing of those minerals that help run electric vehicles, batteries, wind turbines and semiconductor chips.

This is not just an India-specific problem. Many governments are trying different ways to promote the sector. The US has promised price guarantees, procurement arrangements and financing mechanisms, while countries such as Australia, Canada and Japan are experimenting with subsidies, finance and policies to improve supply over time. For now, the IEA suggests building strategic stockpiles for 11 high-risk minerals. India’s agreements with various nations are important steps in the right direction, but can’t be a substitute for domestic industrial capability.

For governments, China is an example. The Asian nation’s dominance is not just due to its mineral reserves -- it also imports ore, but its advantage comes from years of integrating processing systems, designing equipment, developing advanced chemicals and setting up downstream units. China’s recent export restrictions on some minerals and technology show that the leverage comes not only from controlling resources but also from having the capability to transform them. The difficulty for countries like India is that even if they succeed in building critical minerals refineries, they would still have to rely on the very countries on which they eventually want to reduce their dependence for equipment, catalysts, chemicals and technical expertise.

India’s next policy phase needs to be different. Until now, it was all about recognising critical minerals, setting up some companies and building global partnerships. What’s important now is to create conditions for private capital to flow into assets that may not prove profitable for 10-15 years. Policy attention should shift to price support mechanisms, concessional funding, long-term purchase arrangements, government equity participation, and other ways of sharing commercial risk. Instead of chasing all 30 critical minerals, attention could be focused on a narrower band where India can realistically build a competitive position.

The critical minerals race can’t just be won underground. The answer is also not simply in building refineries. The winners would be those who control the entire chain – from mining to manufacturing.