Roadmap for a Resilient Indian Mineral Economy

This editorial is based on “Mineral exploration needs rethink” published in The Financial Express on 07/07/2026. The article emphasises that India must revamp its mining framework to attract private risk capital, eliminate critical mineral import dependencies, and secure its high-tech manufacturing sector by offering tenure security and first-mover incentives over rigid auction models.

The mining sector is a vital economic pillar for India, driving infrastructure, employment, and fiscal revenue while supporting the clean energy transition. However, severe structural bottlenecks, extreme import dependencies on critical minerals, and a massive private investment gap threaten long-term supply chain security. To build resilience, India must pioneer frontier reforms like Mining 4.0, deep-ocean harvesting, circular economic frameworks, and advanced tech-driven resource substitution.  

What is the Role of the Mineral Sector in India’s Development? 

• Backbone of Core Infrastructure and Manufacturing Industries: The domestic mineral sector supplies essential inputs to critical core upstream industries such as iron, steel, power generation, and cement. India is the 2nd largest crude steel producer globally, an achievement entirely dependent on domestic iron ore extraction.  
  • Driven by legislative reforms, domestic iron ore production doubled from 129 million tonnes (MT) in 2014-15 to 258 MT in 2022-23.  
  • Similarly, limestone production (the primary input for cement used in national infrastructure like the Bharatmala Project) surged from 295 MT to 406 MT over the same period, ensuring a steady domestic supply chain.  
• Employment Generation and Rural Livelihoods: Mining is highly labor-intensive, making it a powerful tool for socio-economic absorption in rural and tribal regions that lack large-scale service sector footprints.  
  • Official figures from the Ministry of Mines indicate that the mining sector supports 1.25 crore jobs across direct extraction and indirect subsidiary or downstream channels.  
  • Major mining clusters in resource-rich states like Odisha (Keonjhar), Chhattisgarh (Bastar), and Jharkhand (Dhanbad) leverage a localized multiplier effect, where every direct mining job generates approximately 10 indirect livelihoods in logistics, equipment maintenance, and commercial services.    
• Securing Strategic & Critical Minerals for Energy Transition: As India pursues its Net-Zero carbon goals, the mineral sector is pivoting toward critical and deep-seated minerals essential for high-tech electronics, electric vehicle (EV) batteries, defense equipment, and renewable energy storage.  
  • The Mines and Minerals (Development and Regulation) Amendment Act, 2023 (MMDR), designated 24 critical and strategic minerals (including Lithium, Cobalt, and Nickel) under Part D of the First Schedule, empowering the Central Government to exclusively auction their mining leases and composite licences to accelerate domestic exploration. 
  • The introduction of the new Exploration Licence (EL) framework is actively channeling private investments to map deep-seated deposits, such as the recently discovered lithium reserves in Reasi, Jammu & Kashmir, and critical blocks in Chhattisgarh.  
• Revenue Maximization through the Transparent Auction Regime: The transition from administrative allocations to market-driven mechanisms has transformed the mineral sector into an immense fiscal contributor for state governments.  
  • Following the introduction of mandatory e-auctions via the MMDR Amendment Act, 2015, the government has successfully auctioned over 385 major mineral blocks.  
  • Odisha’s mineral revenue jumped from ₹19,105 crore (collected across the entire decade of 2004–2015) to ₹1,33,711 crore in the post-auction regime (2015–2024). 
• Regional Upliftment via the District Mineral Foundation (DMF): The sector features an integrated socio-economic safety net aimed at mitigating the local externalities of mining operations and developing areas impacted by extraction.  
  • Under the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY), statutory bodies called District Mineral Foundations (DMF) collect a percentage of royalties directly from miners. These funds are legally mandated to be spent on drinking water, healthcare, education, and environmental restoration within the mining districts. 
  • Crores of rupees accumulated in DMF accounts have successfully funded regional healthcare infrastructure and piped water networks in backward districts like Sundargarh (Odisha) and Korba (Chhattisgarh).    
• Advancing Aatmanirbhar Bharat and Strategic Import Substitution: A robust domestic mining industry insulates India from global commodity price volatility, supply chain shocks, and geopolitical vulnerabilities, accelerating the Aatmanirbhar Bharat (Self-Reliant India) mandate.  
  • The government’s policy push to eliminate end-use restrictions and allow captive mines to sell up to 50% of their annual mineral production in the open market has drastically reduced reliance on mineral imports.  
  • By unlocking domestic merchant mining, India has significantly cut import bills for non-coking coal and thermal power inputs, helping stabilize the nation’s Current Account Deficit (CAD).   
• Geographic Concentration as Regional Growth Poles: The highly concentrated nature of mineral wealth in India creates distinct regional economic engines, allowing resource-rich states to generate high industrial income levels.  
  • The Economic Survey 2024-25 highlights that mining activity is highly concentrated, with the top five states—Assam, Chhattisgarh, Gujarat, Maharashtra, and Odisha—accounting for roughly 60% of the total all-State mining Gross State Value Added (GSVA).  
  • These mining clusters act as geographic growth poles, pulling in heavy capital expenditure, high-voltage power grids, and dedicated logistics pipelines (like the Freight Corridors) that catalyze adjacent industrialization.  
• Enhancing Geoscience and Advanced Exploration Capabilities: To sustain economic expansion, the sector is driving the technological modernization of India’s geological exploration infrastructure, shifting focus from surface mining to deep-seated deposit discovery.  
  • The Geological Survey of India (GSI) has demarcated an Obvious Geological Potential (OGP) area of 6.88 lakh sq. km.    
  • To accelerate exploration, the government launched the National Geoscience Data Repository (NGDR) portal, integrating legacy data with baseline geoscience maps. Funded by the National Mineral Exploration Trust (NMET), the total number of strategic mineral exploration projects climbed sharply from 251 in 2021-22 to 450 projects, opening up previously hidden resources for sustainable long-term economic development.  

What are the Major Challenges in India’s Mineral Supply Chain? 

• Near-Total External Dependence on Battery and High-Tech Minerals: While India boasts significant geological footprints in bulk commodities like iron ore and bauxite, it suffers from a structural deficit in electrochemically critical minerals required for the clean energy transition, electric vehicle (EV) ecosystems, and defense hardware.  
  • India faces acute strategic vulnerabilities due to being 100% import-dependent for critical minerals such as lithium, cobalt, and nickel. Furthermore, six essential minerals—bismuth, lithium, silicon, titanium, tellurium, and graphite—carry import dependency rates exceeding 40%.   
  • Despite the highly publicized discovery of 5.9 million tonnes of inferred lithium resources in Reasi, Jammu & Kashmir, the project remains stalled in preliminary exploration, far from commercial viability.  
• High Supplier Concentration and Geopolitical Vulnerability: India’s external procurement is exposed to intense systemic risk due to the geographic concentration of mineral mining and intermediate processing in a handful of nations, leaving domestic industries highly vulnerable to export controls, resource nationalism, and price manipulation.  
  • The “Lithium Triangle” (Chile, Argentina, and Bolivia) and Australia account for over 75% of global lithium extraction. The Democratic Republic of the Congo (DRC) controls more than 70% of global cobalt mining, while nickel extraction is concentrated heavily in Indonesia and the Philippines. 
  • The global mineral supply chain is heavily concentrated, with China controlling over 90% of global rare earth processing, 95% of graphite processing, and 79% of refined cobalt production, transforming mineral access from a trade issue into a major geoeconomic risk.  
• Severe Rail Network Congestion and Freight Bottlenecks: Moving millions of tonnes of bulk minerals (such as thermal coal, coking coal, and iron ore) from the mineral-rich eastern belt to industrialized western and southern states strains India’s transport infrastructure. The modal mix remains heavily dependent on an over-saturated railway network.  
  • A NITI Aayog study on rail freight efficiency confirms that bulk commodities like coal (50%) and iron ore (11%) constitute over 60% of Indian Railways’ total freight traffic.    
  • Logistical gridlocks frequently trigger power plant inventory depletion; during peak demand cycles, despite massive mine-head stocks held by Coal India Limited (CIL), rail transit times lag 2 to 3 days behind road alternatives due to wagon placement delays, lack of automated good sheds, and route congestion.  
• Fragmented First-Mile Connectivity (FMC) and High Logistics Costs: The “pit-to-port” and “mine-to-siding” movement of minerals relies heavily on inefficient, polluting, and high-cost road trucking rather than mechanized, automated transit networks.  
  • The Ministry of Coal’s Smart Coal Logistics Plan highlights that the absence of enclosed conveyor belts, Silos, and Rapid Loading Systems at smaller merchant mines results in cargo leakage, environmental fines, and severe multi-modal handling delays.  
• Private Investment and Exploration Gap: There is a stark structural gap in domestic exploration funding. While countries like Australia and Canada each see over $2 billion in annual private exploration spending, private sector spending on mineral exploration in India is less than $5 million.  
  • Frontier mineral exploration requires years of speculative, patient geological investigation (mapping, sampling, and modeling). India currently lacks a framework that effectively draws in the private entrepreneurs and technological innovation required to take these high-risk geological bets.  
• Policy and Structural Bottlenecks: India relies on an auction process to award exploration licences. While efficient for proven reserves, this mechanism has resulted in weak private sector interest for critical front-runner minerals like lithium, nickel, and cobalt when applied to unproven, frontier lands.  
  • Under the current framework, if a private explorer successfully discovers a mineral deposit, the government retakes the area to auction the mining lease afresh. This fundamentally breaks the investment case, as companies risk losing the commercial mining rights after spending years and capital on the initial exploration.  
• Underdeveloped Material Circularity and E-Waste Recycling Systems: India is yet to commercialize a comprehensive secondary supply chain that recovers critical minerals from scrap metal, industrial slag, and electronic waste (e-waste) to cushion the primary supply chain.  
  • Currently, India recycles less than 5% of its total e-waste and end-of-life vehicle batteries through formal, organized technology channels.   
  • The rest drifts into the informal sector, where primitive burning methods destroy valuable traces of Cobalt, Neodymium, and Rare Earth Elements (REEs), causing severe environmental pollution while missing an opportunity to fulfill a portion of domestic mineral demand through advanced recycling.     

How can India Build a Resilient Mineral Supply Chain?  

• Unlocking Ocean Mining via the Deep Ocean Mission: When land-based reserves are geologically constrained or exhausted, the ocean floor offers a massive, untapped frontier. The Central Indian Ocean Basin holds trillions of dollars worth of critical minerals waiting to be recovered.  
  • India must accelerate the commercialization of its Samudrayaan Mission, utilizing the indigenous deep-submergence vehicle Matsya 6000.  
  • These nodules contain high concentrations of Nickel, Cobalt, Copper, and Manganese. Successfully transitioning from exploratory trials to deep-sea robotic harvesting can secure India’s energy transition requirements for decades without relying on land-based imports.  
• AI-Driven Molecular Substitution: By using artificial intelligence and quantum computing, India can design alternative materials using abundant domestic elements.  
  • The Ministry of Science and Technology, alongside institutions like IISc and CSIR, can establish a dedicated Materials Genome Cell. This initiative uses machine learning to simulate and discover high-performance molecular alternatives to scarce inputs.  
  • Indian conglomerates are already commercializing Sodium-ion battery technology (utilizing abundant domestic agricultural waste and rock salts to replace lithium-ion batteries) and developing Rare Earth-free permanent magnets (such as Iron-Nitride) for EV drivetrains, systematically engineering critical minerals out of the supply chain.   
• Bio-Leaching and Phytomining of Historical Mine Tailings: Deploy bio-metallurgy, which uses specialized micro-organisms (like Acidithiobacillus ferrooxidans) to extract trace metals from solid materials, along with phytomining (using hyperaccumulating plants to absorb metals through their roots).  
  • Applying bio-leaching to the massive slag dumps at Hindustan Copper Limited (Khetri, Rajasthan) or old gold mining tailings at Kolar Gold Fields (Karnataka) can profitably recover high-purity Copper, Zinc, and trace Rare Earth Elements from material previously dismissed as industrial waste.  
• Transitioning to a ‘Mineral-as-a-Service’ (MaaS) Leasing Paradigm: The government can introduce a regulatory framework for Mineral-as-a-Service (MaaS). Under this legal architecture, when strategic minerals like Cobalt or Lithium are imported or mined domestically, ownership rights remain with a national consortium or the primary producer. The minerals are merely leased to battery manufacturers and OEMs.  
  • When an electric vehicle or industrial component reaches its end-of-life, the physical item is legally mandated to return to designated refining centers. The consumer pays for the utility of the mineral, while the physical material remains a permanent asset within India’s domestic industrial loop, preventing illegal export or down-cycling.  
• Sovereign Commodity Derivatives Hedging: The Ministry of Finance, in coordination with the Reserve Bank of India (RBI), can set up a Sovereign Mineral Hedging Fund. Similar to how global airlines hedge fuel costs, this state-backed fund would trade in long-term commodity derivatives, futures, and options contracts on international exchanges like the London Metal Exchange (LME).  
  • By locking in prices and supply volumes for volatile commodities like Nickel and Copper 3 to 5 years in advance, India can insulate its domestic manufacturing industry from sudden price spikes, speculative market squeezes, or geopolitical supply shocks. 
• Deploying Mining 4.0 via Edge Computing and Digital Twins: Mandate the integration of Digital Twins—real-time virtual replicas of physical mining operations—powered by industrial IoT sensors and edge computing.      
  • Organizations like Coal India and National Mineral Development Corporation (NMDC) can use these digital twins to optimize blast patterns, monitor ore grade variability in real-time, and run predictive maintenance on processing plants.  
  • Maximizing the processing yield at the point of extraction prevents valuable mineral fractions from being lost to reject streams, optimizing supply chain output without expanding physical mining footprints.