India’s critical minerals strategy: India has begun using its diplomatic network to help companies acquire critical mineral assets abroad, recognising that domestic mining alone cannot meet the raw material requirements of its expanding manufacturing sector. The government has appointed nodal officers in Indian missions across mineral-rich countries to assist companies seeking exploration and mining opportunities. The initiative addresses a genuine weakness in India’s industrial strategy. The country wants to become a major producer of electric vehicles, batteries and advanced electronics, but remains heavily dependent on imports for several minerals essential to these industries.
Lithium is needed for rechargeable batteries, copper for electrical infrastructure and rare earth elements for electric motors and electronic equipment. Supplies of these minerals, particularly their processing and refining, are concentrated in relatively few countries. China dominates several stages of the supply chains for rare earths, graphite and battery materials. India can reduce its exposure by investing in mines elsewhere, although securing access to deposits will require considerably more than diplomatic assistance.
READ | India’s critical minerals mission needs a sharper edge
The Ministry of Mines is identifying overseas investment opportunities in coordination with Indian missions, financial advisers and mining companies. Information on prospective projects is being shared with Khanij Bidesh India Ltd (KABIL), public sector undertakings and interested private investors. Diplomatic officers can help companies navigate local regulations, obtain information about deposits and deal with host governments. Whether Indian companies can compete successfully with established international mining groups will depend on their financial resources, technical capabilities and willingness to undertake long-term risks.
Domestic mineral discoveries are insufficient
India has considerable mineral resources, but the discovery of a deposit provides little assurance that it can be mined profitably. Exploration may take years before the size and quality of a resource can be established with sufficient confidence. Extraction requires substantial capital, appropriate technology and supporting infrastructure. Environmental approvals, land acquisition and objections from affected communities can delay development further.
The experience with lithium in Jammu and Kashmir illustrates the difficulty. In February 2023, the Geological Survey of India announced an inferred resource of 5.9 million tonnes of lithium ore in Reasi district. The discovery generated expectations that India could substantially reduce its dependence on imported lithium. Yet an inferred resource is a preliminary geological estimate, not a commercially recoverable reserve. Further exploration is necessary to determine how much lithium can be extracted and at what cost.
The Reasi block subsequently failed to attract adequate investor interest in two auction attempts, the second of which was cancelled in July 2024. Difficulties associated with extraction and processing, together with insufficient geological information, were among the concerns identified in reporting on the failed auctions. The deposit may eventually prove valuable, but its discovery did not establish the commercial case for developing a mine.
Overseas investments can therefore play a useful role alongside domestic exploration. Indian companies could acquire interests in producing mines, participate in projects under development or negotiate long-term supply agreements. The choice should depend on the mineral, the quality of the asset and the economics of obtaining usable material. Buying a mine that cannot produce competitively would do little to improve supply security.
Processing presents an additional difficulty. Minerals extracted in one country frequently have to be shipped elsewhere for refining before manufacturers can use them. China’s established position in mineral processing means that ownership of a foreign deposit need not reduce dependence on Chinese refining facilities. Without suitable processing arrangements, India could acquire mining assets abroad and still remain vulnerable to the disruptions it seeks to avoid.
READ | Why oil demand remains resilient amid quest for critical minerals
Financing overseas mines and managing political risk
Mining investments require substantial capital long before revenues begin to flow. Companies must spend on exploration, feasibility studies and infrastructure without knowing whether a commercially viable operation will result. Once the investment has been made, it is difficult to withdraw without incurring substantial losses.
Foreign investments carry additional uncertainties. Governments can alter royalty rates, impose export restrictions, change ownership requirements or revise mining regulations. Political instability and expropriation are risks in some mineral-producing countries. A project that appears financially attractive when an investment decision is taken may become unviable because of developments beyond the investor’s control.
Indian mining companies have consequently sought greater government support for overseas acquisitions. Proposals reported in the business press include protection against geopolitical risks, particularly nationalisation. Such demands deserve examination, although the distinction between political risk and ordinary commercial risk must be maintained.
The government should not guarantee returns on speculative investments or compensate companies for poor geological assessments, cost overruns or adverse movements in commodity prices. Doing so would encourage excessive risk-taking at public expense.
A more defensible approach would provide targeted political-risk insurance, partial guarantees and co-investment arrangements for carefully selected projects. Protection could cover identifiable events such as expropriation, political violence and restrictions on transferring funds. Companies would still bear the normal risks of exploration, project development and mineral prices.
Eligibility should depend on independent technical assessments, transparent project selection and a demonstrable contribution to India’s mineral requirements. The government could also examine arrangements with international insurers and development finance institutions rather than assuming all the risks itself. Public support would then address risks that private investors cannot reasonably manage, without relieving them of responsibility for commercial decisions.
National Critical Mineral Mission and overseas acquisitions
The National Critical Mineral Mission, approved in January 2025, provides a framework for such interventions. It envisages government expenditure of ₹16,300 crore over seven years, alongside an expected ₹18,000 crore in investment from public sector undertakings and other stakeholders. The mission covers exploration, mining, processing and recovery of minerals from discarded products. Overseas asset acquisition is also part of its mandate.
Implementation will require coordination between agencies whose responsibilities and priorities differ. The Ministry of Mines can identify opportunities, diplomatic missions can assess political conditions and KABIL can undertake technical and commercial evaluations. Banks and other financial institutions must determine whether proposed investments are viable. Unless these assessments inform one another at an early stage, potentially useful projects could become entangled in administrative procedures or advance without adequate scrutiny.
KABIL’s agreement with Argentina’s state-owned CAMYEN illustrates the possibilities and limitations of this approach. Signed in January 2024, the agreement gives the Indian company exploration and exclusivity rights over five lithium brine blocks covering approximately 15,703 hectares in Catamarca province. Commercial exploitation depends on further exploration and establishing the presence of economically recoverable lithium. The agreement is an investment in future supply possibilities rather than a source of immediate mineral imports.
KABIL has also signed an agreement with Australia’s Critical Minerals Office to examine investment opportunities in lithium and cobalt projects. Such partnerships provide access to geological expertise and potential assets in countries with established mining industries. They do not remove the need to evaluate project economics or negotiate arrangements ensuring that production can reach Indian manufacturers.
International cooperation could improve financing prospects. The Quad Critical Minerals Initiative, launched in July 2025 by India, Australia, Japan and the United States, was expanded through a framework adopted in May 2026. The framework envisages mobilising up to $20 billion in public and private-sector support for projects involving mining, processing and recycling. Its usefulness to India will depend on the investments that materialise and the terms on which companies can participate.
READ | India’s critical minerals push needs a midstream reset
Critical minerals strategy: Mineral security requires domestic processing
India’s overseas strategy needs to be accompanied by investment in processing facilities at home. Acquiring lithium or rare earth deposits abroad would offer limited industrial advantage if the extracted material had to be processed by suppliers in countries whose dominance India is attempting to reduce.
Building processing capacity is expensive and technologically demanding. Projects need reliable feedstock, skilled personnel and commercial demand sufficient to justify the investment. The government must therefore examine the relationship between overseas mining projects and potential processing facilities in India before committing public resources. Supply agreements could be particularly useful where outright ownership of a mine offers little additional advantage.
Recycling provides another source of supply. The government approved a ₹1,500 crore incentive scheme in September 2025 to support recovery of critical minerals from used batteries, electronic waste and other secondary materials. Recycling can help recover materials already circulating within the economy, although the quantity available will depend on collection systems, recovery technology and the volume of products reaching the end of their useful lives.
India’s mineral security will ultimately depend on the quantity, quality and reliability of materials reaching its factories. Overseas acquisitions should be judged by their commercial viability and contribution to dependable supplies, rather than the number of mining blocks secured. Diplomatic support can open doors for Indian companies, but the decisions that follow must rest on credible geological information, disciplined financing and workable processing arrangements.