Critical minerals have become the “new oil” of the 21st century because they power the world’s clean-energy transition. They sit at the core of electric vehicles, wind turbines, advanced electronics and modern defence platforms. India’s recent decision to rationalise royalty rates for graphite, caesium, rubidium and zirconium reflects this new strategic awareness. Shifting graphite to an ad valorem levy and lowering the rates on other minerals strengthens the upstream side of the value chain and aligns with the National Critical Minerals Mission.
Yet mining is only the first step. The harder work begins after extraction. India has focused on exploration, auctions and royalty reforms, but the country still lacks depth in processing, refining and component manufacturing. Without those links, upstream reforms cannot translate into strategic autonomy or industrial competitiveness.
READ | Andhra’s tenant farmers struggle for credit and stability
China built dominance where India is weakest
China understood early that real leverage in the minerals economy lies in the midstream. It built world-leading capabilities in separation, refining and magnet manufacturing. Data from the Council on Energy, Environment and Water show China now controls over 90% of rare-earth processing and graphite refining, and dominates cobalt and lithium chemicals as well. These processes form the chokepoints of the global supply chain because they are hard to replicate, require years of technical refinement and carry high environmental costs.
India relies entirely on imports for high-purity lithium, cobalt, nickel and rare-earth oxides. Even if the country succeeds in mining more ore, the value captured remains low unless that ore is converted into battery-grade materials, high-purity hydroxides or magnet alloys at home. The margins, technology and geopolitical leverage continue to reside abroad when processing is outsourced.
India’s policy response is not unfolding in isolation. New Delhi has joined the US-led Minerals Security Partnership, deepened collaboration with Australia on mineral exploration and processing, and expanded cooperation with Japan and the EU on supply-chain resilience. These partnerships matter because they offer access to upstream reserves and, more importantly, to processing technology that India does not yet possess. Critical minerals are no longer a purely domestic challenge. They are a test of India’s ability to build coalitions in a world where supply chains are becoming political instruments.
Recycling is the invisible mine India has not tapped
India’s modest geological endowment makes recycling an essential part of any long-term strategy. As EV adoption grows and electronics consumption rises, India will generate significant volumes of used batteries, circuit boards and wind turbine components by the end of this decade. These can become secondary sources of lithium, cobalt, nickel and rare-earths. Many advanced economies treat recycling as a core pillar of their mineral security. The EU has embedded circularity into its industrial policy, and Japan has demonstrated how rare earths can be recovered at scale from end-of-life electronics.
India has taken early steps with battery waste regulations and pilot recycling plants, but the effort remains small. A resilient supply chain will require recycling hubs, uniform quality standards and incentives for recovered materials. The country cannot build autonomy on mining alone when recycled minerals can provide a stable and lower-impact alternative.
Processing capacity demands capital and technology
Refining and chemical processing of minerals require large investments, long gestation periods and specialised skills. India lacks a dedicated framework to mobilise this capital. Production-linked incentive schemes support cell manufacturing, but do not extend meaningfully to processing. There is no viability-gap mechanism for critical minerals refining, and the absence of cluster-level infrastructure raises costs for potential investors. Technology access adds another layer of complexity. Rare-earth separation and magnet-making involve proprietary processes held by a small group of global firms. Without structured partnerships and technology-sharing agreements, India cannot scale midstream capacity.
Mining reforms have created momentum, but they will not translate into industrial capability unless supported by a financing model that derisks long-term investments and aligns them with downstream demand.
Environmental and social risks could slow expansion
Critical minerals extraction and refining come with environmental and social risks. Lithium refining consumes large volumes of water. Rare-earth processing generates toxic waste. Cobalt and nickel extraction can displace communities and degrade fragile ecosystems. India’s deposits lie in states such as Odisha, Chhattisgarh, Jharkhand and Arunachal Pradesh, where tribal populations and ecological sensitivities are significant. The absence of strong environmental and social governance standards can trigger local opposition, delay projects and raise hidden costs.
Global buyers are tightening sustainability requirements, and international norms such as IRMA and EITI are increasingly influencing procurement decisions. India needs credible ESG frameworks as much as it needs new mines.
Building the midstream and downstream
The strategic priority now is to scale domestic refining of lithium, graphite, nickel, cobalt and rare-earths. India must create commercial-scale processing facilities capable of converting ore—domestic or imported—into battery-grade materials and high-purity metals. Downstream manufacturing must develop in parallel. Magnets, battery modules, wind turbine components, power-electronics systems and high-end alloys are areas where capacity remains thin but demand is rising.
Partnerships with countries such as Australia, Japan, South Korea and the US will be central to accessing technology and sharing risks. Recycling hubs will increase feedstock availability. State governments can strengthen the effort by building mineral processing clusters with shared infrastructure and environmental management systems.
A strategy for real autonomy
India has taken the right steps in mining, but the clean-tech race of the 2030s will be won in processing plants and manufacturing workshops. A serious strategy must integrate diplomatic partnerships, domestic processing capacity, circular-economy systems, targeted financing mechanisms and strong environmental safeguards. Mining is the starting point, not the destination.
If India wants to climb the clean-tech value chain, it must build the factories and technologies that turn ore into motors, magnets, batteries and advanced materials. The contest will be won not by those who dig the fastest, but by those who can convert minerals into economic and strategic power. India still has time to get this right, but the window is narrowing.