Economic Survey sees critical minerals as new geopolitical chokepoints

The Economic Survey's identification of critical minerals as 'new geopolitical chokepoints' marks a significant shift in India's strategic and economic thinking. Critical minerals are essential for modern technologies, including renewable energy systems (solar panels, wind turbines), electric vehicles (EVs), semiconductors, defense equipment, and advanced electronics. Examples include lithium, cobalt, nickel, rare earth elements, graphite, and copper. Their criticality stems from their indispensability to high-tech industries, coupled with concentrated global supply chains, often controlled by a few nations or regions, making them susceptible to geopolitical leverage and disruptions. The COVID-19 pandemic and recent geopolitical tensions have starkly highlighted the vulnerabilities inherent in global supply chains, pushing nations to re-evaluate their dependencies. The Economic Survey advocates for a two-pronged strategy: building resilient supply chains and significantly enhancing domestic capabilities. Building resilient supply chains involves diversifying import sources, entering into long-term procurement agreements, and establishing strategic reserves. The emphasis on domestic capability enhancement spans mining, processing, and manufacturing. Currently, India is heavily import-dependent for many critical minerals, despite having some reserves. For instance, India relies almost entirely on imports for lithium, cobalt, and rare earth elements, which are vital for its ambitious electric vehicle and renewable energy targets. This reliance exposes India to price volatility, supply shocks, and the potential for other nations to use their mineral dominance as a foreign policy tool. Key stakeholders in this endeavor include various government ministries such as the Ministry of Mines, Ministry of Commerce and Industry, Ministry of External Affairs, and the Ministry of Finance. Public Sector Undertakings (PSUs) like Khanij Bidesh India Ltd (KABIL), a joint venture formed by NALCO, HCL, and MECL, play a crucial role in exploring and acquiring mineral assets abroad. The private sector, encompassing mining companies, processing units, and manufacturing industries, is also a vital stakeholder, requiring policy support and incentives for investment. International partners, particularly those sharing concerns about supply chain resilience, are also important as India looks to forge alliances for secure access to these minerals. For India, this issue holds profound significance across economic, strategic, and geopolitical dimensions. Economically, securing critical minerals is fundamental to the 'Make in India' and 'Atmanirbhar Bharat' initiatives, especially in sectors like electronics, EVs, and defense manufacturing. It will reduce the import bill, create jobs, and foster technological self-reliance. Strategically, dependence on a few countries for essential minerals poses a national security risk, particularly for defense production. Diversifying and localizing the supply chain enhances India's strategic autonomy. Geopolitically, access to critical minerals is becoming a new currency of power. By strengthening its position, India can enhance its leverage in multilateral forums and bilateral relationships, participating effectively in global initiatives like the Supply Chain Resilience Initiative (SCRI) with Japan and Australia. Historically, India has pursued self-reliance in various sectors, though resource dependence has always been a challenge. The current focus on critical minerals is a modern manifestation of this pursuit, adapting to the demands of the 21st-century economy. The legal framework governing mineral resources in India is primarily the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act). The government has already amended this Act, notably in 2015 and 2021, to streamline auction processes and boost domestic production. Further amendments or new policies may be required to facilitate exploration, grant mining leases for critical minerals, and incentivize processing technologies. The National Mineral Policy, 2019, also emphasizes the need for sustainable mining and reducing import dependence. Constitutionally, mineral resources fall under the Seventh Schedule, with Entry 54 of the Union List giving the Parliament power to regulate mines and mineral development to the extent declared by Parliament to be expedient in the public interest, while Entry 23 of the State List covers state regulation subject to Union laws. This dual jurisdiction necessitates cooperative federalism for effective implementation. Future implications include increased government investment in geological surveys and exploration, technology upgradation for mineral processing, and incentivizing private sector participation through policy reforms and financial support. India is likely to actively pursue international collaborations, joint ventures, and strategic partnerships for mineral exploration and extraction in resource-rich countries. The successful implementation of these strategies will be crucial for India to meet its net-zero emission targets by 2070, power its digital economy, and establish itself as a global manufacturing hub, securing its position in the rapidly evolving global technological and economic landscape.