The Indian government has announced far-reaching reforms for the critical minerals sector in its Union Budget, aiming to boost competitiveness, encourage domestic production, and foster sustainability. With new policies targeting the recovery of minerals from mining by-products, a customs duty exemption on 12 key minerals, and the establishment of a State Mining Index, the country is poised to advance its critical minerals strategy. These measures are expected to support industries such as electric vehicle (EV) manufacturing, renewable energy, and electronics, aligning with India's ambitions under the Aatmanirbhar Bharat (Self-Reliant India) vision.

Critical Minerals Recovery and Circular Economy Focus

The government has prioritized the recovery of critical minerals from mining tailings and by-products as part of its sustainability drive. This move aims to reduce dependence on imports by maximizing domestic resources.

Tailings Recovery Policy: Announced by Finance Minister Nirmala Sitharaman, this policy focuses on extracting critical minerals from mining waste.
Circular Economy: By encouraging the recycling and reuse of resources, the initiative supports innovation and promotes a sustainable approach within the mining industry.
Industry leaders have welcomed these reforms. Arun Misra, CEO of Hindustan Zinc Ltd, emphasized that critical minerals are crucial for India’s transition to a low-carbon economy. Metals like zinc, lead, and cobalt will be essential for renewable energy storage and electric mobility.

Customs Duty Waiver on Key Minerals

The removal of import duties on 12 critical minerals, including cobalt powder, lithium-ion battery scrap, lead, and zinc, is a game-changer for the sector. This exemption will ensure better availability of essential materials, supporting industries that rely heavily on these inputs.

Impact on MSMEs: According to Rakesh Surana, Partner at Deloitte India, the customs duty waiver will strengthen supply chains for micro, small, and medium enterprises (MSMEs), fostering growth in the manufacturing sector.
Lithium and Cobalt Imports: The inclusion of lithium scrap and cobalt waste in the duty exemption list will directly benefit industries engaged in battery production and recycling.
The government had previously scrapped import duties on 25 other critical minerals, with reductions in customs duty for two more minerals aimed at facilitating local processing.

Introduction of the State Mining Index

The budget includes plans to institutionalize a State Mining Index, designed to improve the governance of minor minerals by promoting healthy competition among states.

Sharing Best Practices: This initiative will encourage states to adopt and implement best practices in mining operations and resource management.
Transparency and Efficiency: The index aims to enhance transparency, helping states measure and benchmark their performance in developing minor mineral resources.

National Critical Minerals Mission and Aatmanirbhar Bharat

These reforms align with India’s recently launched National Critical Minerals Mission, which aims to secure a stable supply of essential resources for strategic industries. The initiative is part of the government’s broader Aatmanirbhar Bharat program.

Strategic Resource Security: By reducing dependence on imports, India aims to protect its industries from global supply chain disruptions.
Long-Term Vision: This policy framework will facilitate investments in mining and mineral processing infrastructure, enhancing self-reliance and sustainability.

Boost for Key Industries

The critical minerals reforms will have a significant impact on several industries, particularly those at the forefront of India’s green energy transition and technological advancement.

Electric Vehicle Manufacturing: The availability of cobalt, lithium, and other key minerals is essential for producing EV batteries, enabling India to accelerate its push for clean transportation.
Renewable Energy: Minerals such as zinc and lead play a vital role in renewable energy storage, ensuring efficient and scalable energy solutions.
Electronics and Manufacturing: Vedanta Chairman Anil Agarwal emphasized that mining reforms can boost domestic production in electronics and related manufacturing sectors, reducing import dependence and creating new employment opportunities.

Industry Reactions to the Mining Reforms

Prominent industry figures have expressed optimism regarding the government’s focus on mining reforms.

Arun Misra (Hindustan Zinc Ltd): Misra highlighted the transformative potential of the policies, noting their importance for both competitiveness and sustainability.

Rakesh Surana (Deloitte India): Surana underscored the importance of duty exemptions for MSMEs, particularly in strengthening domestic supply chains for critical industries.

Anil Agarwal (Vedanta): Agarwal praised the inclusion of mining among the six priority domains for reform, emphasizing its capacity to increase domestic output and generate millions of jobs across multiple sectors.

Reforms to Enable Economic Growth

The government’s comprehensive approach to reforming the critical minerals sector is expected to drive long-term economic growth by:

Improving Resource Efficiency: Policies aimed at recovering minerals from tailings will maximize the utilization of existing resources.
Strengthening Domestic Industries: Duty exemptions and streamlined regulations will make raw materials more affordable for key sectors, improving their competitiveness in global markets.
Creating Jobs: Mining reforms, coupled with expanded domestic production, have the potential to create substantial employment opportunities in mining, manufacturing, and related industries.

Summary Table of Key Reforms

Growth in Mining Sector Expected

India’s critical minerals reforms are a crucial step in advancing its industrial and environmental goals. By addressing both resource efficiency and supply chain resilience, the government is creating a foundation for sustainable growth. These measures will not only bolster key industries like EV manufacturing and renewable energy but also pave the way for increased domestic production and job creation. As India continues to strengthen its position in the global minerals market, these reforms will play a pivotal role in shaping the nation’s economic future.