Budget 2026: India's Strategic Push to Become a Global Critical Minerals Powerhouse
Over the past few years, the Indian government has made notable progress in introducing forward-looking policies, acts, and policy amendments aimed at securing the nation's future in the global critical minerals landscape. As the world transitions toward industrial decarbonization, long-term sustainability, and technological advancement, securing reliable supplies of critical minerals has become a strategic priority for governments and industries worldwide.
Why Critical Minerals Matter for India
For India, the supply of critical minerals is of paramount strategic importance due to its growing ambitions in clean energy, electric mobility, advanced manufacturing, semiconductors, aerospace, and defense applications. However, the country remains largely import-dependent for these minerals, leaving it vulnerable to global supply disruptions and geopolitical risks. Additionally, the midstream and downstream value chains are not well-developed, increasing reliance on imports of value-added products like rare earth magnets.
The global imperative to diversify critical-mineral supply chains beyond China, which currently controls the bulk of global mining and over 80% of processing capacities, is reflected in policy responses across nations. India's efforts are part of this broader trend, aiming to reduce dependence and enhance self-sufficiency.
Government Initiatives and Budget Expectations
The National Critical Minerals Mission, with a total envisaged outlay of Rs 34,300 crores spread over seven years, aims to address the entire supply chain—from exploration to domestic production to recycling. This reflects the government's commitment to reducing import dependence. Key measures include:
- Rationalization and approval of new royalty rates for mining 24 critical and strategic minerals to encourage mining and private sector participation.
- Auction of onshore and offshore critical mineral blocks by the Ministry of Mines.
- Full exemption of critical minerals from custom duties in the 2025 Union Budget to boost industry growth.
Looking ahead to Budget 2026, several key themes are expected to be in focus to help India emerge as a powerhouse in the production and value addition of critical minerals.
Exploration, Mining, and Sourcing
India has significantly accelerated domestic exploration for critical minerals through the Geological Survey of India (GSI) and the National Mineral Exploration Trust (NMET) between 2021 and 2025. Budget 2026 may focus on:
- Expansion of domestic exploration through enhanced funding support.
- Augmentation of precompetitive geoscience data.
- Use of artificial intelligence and machine learning tools via innovation centers.
A Viability Gap Funding (VGF) scheme could be introduced to enhance the attractiveness of domestic critical mineral deposits with low concentrations spread over large areas, which often result in higher extraction costs. Overseas investment is also in focus, with an allocation of Rs 5,600 crores under the NCMM to support foreign sourcing and exploration, particularly in strategically important regions like Africa and South America, despite potential geopolitical risks.
Innovative schemes to mobilize private capital and government-backed insurance mechanisms in the Budget may significantly support Indian players in investing and securing funding for such projects. Additionally, strategic stockpiling of critical minerals could be supported through enhanced Budget allocations beyond the Rs 500 crores budgeted under NCMM.
Downstream Processing and Value Addition
Derisking critical minerals mining operations and downstream processing through the removal of import duties provides an investment versus sourcing trade-off for downstream producers. Targeted incentives in the Budget to utilize low-grade ores for beneficiation and processing are required. Since critical mineral processing is highly technology-intensive, funding for indigenous technology development and R&D, particularly in rare earths, would be beneficial in partnership with leading technology providers from regions like Japan, the EU, and South Korea.
A separate fund to establish rare earth demonstration facilities, similar to those in the US, could help demonstrate and boost commercial-scale integrated rare earth extraction and separation facilities in India. Production Linked Incentive (PLI) schemes covering all key value-added products of critical minerals beyond Rare Earth Permanent Magnets (REPMs) would encourage companies to invest in downstream processing. Tax-related support, such as enhanced depreciation in initial years, investment tax credits, and concessional corporate tax rates for new companies, may also be beneficial.
Critical Minerals Recycling
Fly ash, overburden, mine waste, including tailings, red mud, and metal slags, hold significant potential for the recovery of critical minerals. The recent Rs 1,500 crores Incentive Scheme introduced to boost India's recycling capacity for critical minerals may need to include all minerals as defined eligible outputs. There is a need to allocate enhanced funds in the Budget beyond Rs 100 crores under NCMM for pilot projects focused on strengthening capabilities in metal extraction and recovery of critical minerals.
Mapping and characterizing mine waste and categorizing recovery zones are crucial for establishing a sustainable domestic recovery framework, and a separate allocation under the Budget would be useful.
Capacity Building and Skill Development
Upskilling existing roles in exploration, mining, or processing needs attention, while new roles could emerge in refining, metallurgical extraction, or recycling. Separate fund allocations and incentives to set up Skill Development Centres in Public-Private Partnership (PPP) mode would be critical. Targeted incentives for capacity building and leveraging artificial intelligence tools will help draw new talent by encouraging higher education institutions to introduce or expand programs and course offerings.
India has the potential to become a global leader in critical minerals by prioritizing strategic investments across the value chain. This approach will not only meet domestic needs but also contribute significantly to the global supply chain, aligning with the nation's long-term economic and environmental objectives. As Budget 2026 approaches, these initiatives are poised to shape India's journey toward becoming a critical minerals powerhouse.
