Union Cabinet Approves Revised Royalty Rates for Critical Minerals
In a strategic move to strengthen India’s mineral security, the Union Cabinet, led by Prime Minister Narendra Modi, has approved new royalty rates for critical minerals. This decision aims to boost domestic mining, attract investments, and reduce reliance on imports for minerals essential to renewable energy, defense, and electronics.
What Are Critical Minerals?
Critical minerals are vital for economic growth and national security but face supply chain risks due to scarcity or geopolitical factors. India’s list includes lithium, cobalt, nickel, graphite, and rare earth elements (REEs), which are crucial for EV batteries, semiconductors, and defense technologies.
Key Changes in Royalty Rates
The Cabinet introduced a tiered royalty structure based on market demand and strategic value:
- Lithium & Rare Earths (REEs): 4-6% of ASP (up from 2-3%) due to high EV battery demand.
- Graphite & Cobalt: 3-5% of ASP for battery and aerospace uses.
- Nickel & Tungsten: 2.5-4% of ASP, matching global benchmarks.
Why This Decision Matters
- Cutting Import Reliance: India imports 80-90% of critical minerals; higher royalties aim to make domestic mining viable.
- Supporting Green Energy Goals: Ensures supply for 30% EV adoption by 2030 and 500 GW renewable capacity.
- Boosting Investments: Clear rates may attract global mining firms and startups.
- Strengthening Defense: REEs and tungsten are key for missiles and electronics.
Industry & State Responses
- Mining Groups: Praise the move but seek tax breaks for deep exploration.
- States like Odisha & Jharkhand: Expect revenue and jobs from expanded mining.
Global Trends & Challenges
While the U.S. and EU push local mining, China controls processing. India must address:
– Exploration Gaps: Limited data on deep-seated minerals.
– Sustainability: Stricter rules to prevent environmental harm.
Next Steps
- Launch a National Critical Minerals Mission for R&D.
- Partner with Australia/Argentina for lithium tech.
- Offer PLI schemes for processing units.
Conclusion
The new royalty rates mark a leap toward Aatmanirbhar Bharat in minerals, aligning India with global standards while powering clean energy and defense sectors.
