By Jay Prakash Pandey “Pahadi”
For decades, India’s economic debates have revolved around familiar metrics power capacity, manufacturing output, infrastructure creation. Yet some issues remain invisible until they suddenly refuse to stay at the margins. Critical minerals are now one such issue. Without secure and affordable access to lithium, cobalt, rare earths and a small group of other inputs, India’s ambitions in energy transition, electric mobility, semiconductors and defence manufacturing rest on fragile ground. The Union Budget 2026–27 is significant because it acknowledges this reality without euphemism. It accepts that India’s future industrial strength will be shaped not only by factories and grids, but by control over the minerals that feed them.
For too long, India treated these minerals as someone else’s problem. Budget 2026–27 suggests that this complacency may finally be ending.
The policy shift did not emerge overnight. Its formal articulation came in 2023, when the government identified 30 minerals as “critical”. Lithium, cobalt, nickel, graphite, rare earth elements, copper, gallium, germanium and tungsten were placed in this category for two simple reasons. First, these minerals are indispensable for clean energy systems, EV batteries, solar and wind technologies, semiconductor fabrication and modern weapons platforms. Second, their global supply chains are heavily concentrated in a few geographies, making them acutely vulnerable to geopolitical disruption. In other words, India has learnt—slowly—that strategic autonomy cannot be imported at short notice.
The launch of the National Critical Mineral Mission in 2025 was meant to translate this realisation into policy. Crucially, the mission does not treat mining as an end in itself. Its objective is to build supply chains that are secure, diversified and resilient. Targets such as identifying nearly 1,200 potential deposits by 2030 and auctioning over 100 blocks by 2031 reflect a renewed attempt to reassess domestic geological potential. The sharp increase in exploration activity over the past two years, particularly for lithium, cobalt and rare earths, indicates that the state has begun to move beyond declaratory intent.
Yet policymakers appear under no illusion that extraction alone will deliver strategic autonomy. Think-tank studies repeatedly point to the same vulnerability: India’s limited capacity in processing and refining. In many cases, raw ore is mined or imported only for value addition to occur abroad. If this imbalance continues, India will assemble the technologies of the future, but control none of their choke points. That is not leadership; it is dependence by another name.
Read together, the Union Budgets of 2025–26 and 2026–27 suggest that the government has recognised this structural bottleneck. Last year’s Budget removed basic customs duty on 25 critical minerals and eliminated duties on scrap of twelve critical minerals, cobalt powder and lithium-ion battery waste. These measures were not cosmetic. They were designed to make recycling and secondary production commercially viable, strengthening the mission’s quieter but more practical pillar—reducing import dependence through circular supply chains.
Budget 2026–27 pushes this logic further. By eliminating basic customs duty on capital goods required for mineral processing, the government has acknowledged a basic economic truth: critical mineral processing is capital-intensive, technologically demanding and financially risky. Leaving early-stage costs entirely to private investors is unlikely to attract the scale of investment India requires. Policy announcements are easy. Absorbing risk when projects stall or fail is not—and this is where the state will be tested.
The proposal to allow tax deductions for exploration and prospecting expenditure for select minerals reinforces the same message. Geological uncertainty, the Budget implicitly accepts, cannot be borne by the private sector alone. Risk-sharing is no longer optional; it is foundational.
The most strategically loaded announcement, however, is the creation of dedicated rare earth corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu. This is not a routine regional development scheme. It is a direct response to the China-centric structure of global rare earth supply chains. The uncomfortable truth is that India is responding late to a problem others have been gaming for over a decade. By linking these corridors to the National Critical Mineral Mission, the government is attempting to cluster mining, processing and manufacturing within a single institutional framework. The shift in perception is unmistakable: rare earths are no longer viewed as commodities to be extracted and exported, but as strategic inputs for EV motors, wind turbines, defence electronics and advanced manufacturing.
None of this can be assessed in isolation from global geopolitics. China’s dominance in refining and processing has long been flagged as a source of strategic vulnerability for importing countries. Supply disruptions during recent global crises reinforced an old lesson: energy transitions are only as secure as their inputs. It is against this backdrop that India’s engagement with plurilateral arrangements—the Mineral Security Partnership, cooperation under the QUAD, investment partnerships with Australia, and outreach to Gulf and African countries—must be understood.
That said, partnerships are not a substitute for capacity on the ground. Political intent matters, but it delivers little unless backed by operational projects, credible technology transfer and sustained finance. Mining and processing are long-gestation activities, shaped as much by regulatory approvals, environmental safeguards and community consent as by capital availability. Many potential critical mineral deposits lie in ecologically sensitive or tribal regions, where social licence is not merely a legal formality but a moral and political constraint.
It is in recognition of these realities that recycling has been given a central place in both policy and budgeting. The emphasis on recovering critical minerals from tailings, scrap and e-waste marks a conscious shift away from a purely extraction-driven model. A circular approach does not eliminate the need for mining, but it reduces pressure on ecosystems while offering a more reliable path to lowering import dependence over time.
Seen in totality, Union Budget 2026–27 represents a clear inflection point in India’s critical minerals strategy. The diagnosis is sharper and the direction clearer. Rare earth corridors, duty exemptions, tax incentives and mission-mode funding signal seriousness of intent. The intent is unmistakable. The execution is uncertain. India’s critical minerals push will succeed not on the strength of policy language, but on whether processing plants actually come up, communities remain on board, and capital stays invested when returns are slow. Budgets can signal ambition. Only outcomes will decide credibility.
(The author is an Uttarakhand-based independent writer, poet and social activist.)
