How the Budget could accelerate India’s critical minerals mission

The article was first published in The Economic Times Online on January 29 2026. Please click here to read the article.

Critical Minerals like Lithium, Cobalt, and rare earth elements now carry unprecedented global importance with their demand projected to grow multifold by 2040, driven by growth in electric vehicles, clean energy, electronics and defence. This has become a country‑to‑country agenda and for any nation, securing a competitive position in this value chain is essential for resilient growth and future industrial leadership. Given the strong need and the availability of opportunities, India has moved decisively from intent to action. It has launched the National Critical Mineral Mission, a seven-year programme with an outlay of ₹34,300 crore which aims to build a full domestic value chain supported by policy reforms and a criticality list of 30 minerals. Central auctions now include lithium, rare earths and other strategic minerals and overseas sourcing is being pursued by a few companies securing lithium exploration rights in Argentina and is evaluating assets in Australia and Chile. In addition, government’s ₹7,280 crore scheme for rare earth permanent magnet manufacturing and the ₹18,100 crore Advanced Chemistry Cell (ACC) battery PLI are designed to anchor domestic production and pull materials into value-added products.

What follows is genuine localisation-building a fully integrated supply chain where minerals are discovered, extracted, refined, transformed into components such as batteries and magnets, and ultimately recovered from end‑of‑life products. The more India designs and manufactures these products locally, the stronger the case for sourcing and processing minerals within the country rather than exporting value overseas.

Different minerals require tailored strategies

Lithium for EV batteries: India’s lithium mining is still nascent. The Reasi block in Jammu & Kashmir, with an inferred resource of 5.9 million tonnes, is moving toward auction with slight delays, as technical and financial aspects are being carefully addressed to ensure a strong and sustainable foundation for the sector. In simple terms, mining will take time. So, what can be done now? The fastest path is circularity. Leveraging the Battery Waste Management Rules with Extended Producer Responsibility, India can establish a closed loop system to collect, recycle, and channel recovered lithium, nickel, cobalt, and graphite directly into domestic cell manufacturing lines under the ACC PLI scheme. Recycling reduces import risk, builds domestic capability and creates feed stock for gigafactories even as mines progress through exploration.

Rare earth magnets

Can India move faster on rare earth magnets that drive motors and turbines? Yes, by advancing mining and processing together, and linking them to magnet manufacturing. The new rare earth permanent magnet scheme will fund integrated lines from oxides to metals, metals to alloys, and alloys to finished magnets so the value is captured in India. Policy support is translating into action, with expansions boosting mineral output and strengthening the ecosystem for processing plants.

These cases illustrate that localisation is not a one-size-fits-all approach. It involves building domestic strength where reserves exist and creating circular systems where mining will take time. Acting on both fronts will secure supply chains and position India as a leader in emerging technologies.

As a next step, what does a serious execution plan require? Five imperatives stand out:

Secure technology & partnerships

Critical mineral projects need specialised know-how. Look at building joint ventures, signing licensing agreements or getting into technology tie-ups rather than developing everything in-house
Design supply chain from product backwards

Start with anchor products like EV motors, battery cells and wind components. Map mineral and processing needs and localise step by step, linked to real demand
Invest in talent & capability early

Create multidisciplinary teams in geology, processing, operations and compliance. Partner with research institutions and training centres to build skills
Focus on cost & competitiveness

Localisation must match or beat landed import costs. Use efficient plant layouts, domestic equipment and integrate recycling to reduce raw material costs and be globally cost competitive
Secure location integrating with domestic demand

Build capacity around anchor customers in EVs, wind and defence to ensure steady absorption
Align funding to a phased plan

Move in stages of pilot, scale-up, integration with end-use customers. Tie capital to offtake and technology milestones and manage risks proactively

With policy in place and corporates ready, this year’s Budget can turn intent into impact by driving three levers: circularity, technology, and cost competitiveness. Incentivizing EPR compliance, recycling of magnets, and R&D in processing technologies will strengthen domestic capability. Rationalising tax and customs duty structures for critical minerals and battery components can reduce costs and accelerate localisation. Focused fiscal support for closed-loop systems and indigenous technology will encourage serious investments in securing India’s critical mineral future.

Where does this leave corporate leadership and boards? The window of opportunity is open. Policy is in place, demand is rising, and investors seek resilient supply chains. Business leaders should prioritise localisation, select strategic positions across mining, refining, components, and recycling, and move swiftly with credible partners and clear timelines. For entrepreneurs and investors, this is not just about supply security, it is about high quality jobs, exports, and technological leadership. Strategic decisions made today will shape India’s role in critical technologies for years to come.