Budget 2024: Govt announces mission to boost production, recycling of critical minerals

New Delhi: The union government has decided to launch a Critical Minerals Mission to boost the domestic production and recycling of these minerals and their acquisition from overseas. It has also waived customs duty on 25 critical minerals in view of their growing demand across sectors.

Finance minister Nirmala Sitharaman said in her budget speech on Tuesday, "Minerals such as lithium, copper, cobalt and rare earth elements are critical for sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics. I propose to fully exempt customs duties on 25 critical minerals and reduce the basic customs duty (BCD) on two of them.” She said the measure would boost the processing and refining of critical minerals and help secure their availability for strategic and important sectors.

The proposed mission will also involve developing technologies, training the workforce, an extended producer responsibility (EPR) framework, and a financing mechanism for the sector. EPR is a policy strategy that holds producers responsible for the end-of-life consequences of their goods.

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The finance minister also said the government would launch an auction for the first tranche of offshore blocks for mining, building on exploration that has already been done.

Lithium and other critical minerals are required to manufacture batteries, and telecom and defence equipment, among other things. India is looking to develop a manufacturing ecosystem for these products, for which it will need a robust raw-material supply chain.

Building blocks of energy transition

Rishabh Jain, senior programme lead at the Council on Energy, Environment and Water, a non-profit think tank in Delhi, said, "Critical minerals are the building blocks for energy transition and other strategic sectors such as electronics, defence and telecommunications. The announcement of a Critical Minerals Mission will encourage private and government companies to develop capabilities in the critical minerals supply chain and build competitiveness over the medium to long term. 

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"Acquiring critical minerals indigenously and from overseas, and building domestic capabilities to process and recycle them will secure the supply chain for domestic manufacturers, especially in clean-energy sectors such as solar, wind, electric vehicles and batteries."

India is a net importer of critical minerals. To boost domestic mining, the government passed the Mines and Minerals (Development & Regulation) Amendment Bill 2023 last year, through which it can award exploration licences for deep-seated and critical minerals.

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In June 2023, the ministry of mines released a list of 30 minerals critical to India's economy. These are antimony, beryllium, bismuth, cadmium, cobalt, copper, gallium, germanium, graphite, hafnium, indium, lithium, molybdenum, niobium, nickel, PGE, phosphorous, potash, REE (rare earth elements), rhenium, selenium, silicon, strontium, tantalum, tellurium, tin, titanium, tungsten, vanadium and zirconium. Rare-earth elements include neodymium, praseodymium, dysprosium, europium, yttrium, terbium.