India’s critical minerals policy stack is taking shape, but without a stronger midstream sector, strategic autonomy will remain elusive
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In April 2026, Brazilian President Luiz Inácio Lula da Silva announced the new paradigm of mineral diplomacy, stating that Brazil would no longer be content with exporting mineral commodities and would instead seek partnerships involving greater value addition and technology transfer. In February 2026, India inked critical minerals deals with Brazil and France, and in April, the Philippines joined Washington's Pax Silica initiative. These announcements reflect a shift in how producer states are pricing access to lithium, rare earths, cobalt, and gallium: extraction rights alone are no longer sufficient to seal a deal, and buyers must now offer processing technology, downstream investment, or offtake guarantees.
This evolving landscape has important implications for India. Over the past year and a half, India has assembled an ambitious policy stack consisting of the National Critical Minerals Mission (NCMM), the Mines and Minerals (Development and Regulation) Amendment Act, 2025, the Rare Earth Permanent Magnets (REPM) scheme, the National Critical Mineral Stockpile, and the Rare Earth Corridors announced in Budget 2026-27. These instruments touch almost every link in the value chain, except one. India's gap lies in the midstream: the separation, refining, and metallurgy needed to transform mined ore into the high-purity oxides, alloys, and magnets that industry requires.
China's grip on mineral processing underscores a broader truth: control over the midstream can be more consequential than access to the resource itself.
India's policy push has been shaped by the reality that access to critical minerals is increasingly determined by control over processing technology. China's well-documented dominance across mining, refining, and downstream manufacturing — and its willingness to deploy these capabilities as geopolitical leverage — has exposed the vulnerabilities of import-dependent economies. China's grip on mineral processing underscores a broader truth: control over the midstream can be more consequential than access to the resource itself. It is against this backdrop that India has accelerated its efforts to develop a comprehensive critical minerals strategy.
India's policy response since early 2025 has moved faster than most observers expected. The National Critical Mineral Mission was launched in January 2025 with an outlay of ₹16,300 crore over seven years and ₹18,000 crore in estimated PSU investment. The Mines and Minerals (Development and Regulation) Amendment Act, 2025, notified on 21 August 2025, enhanced the auction regime, allowed critical and strategic minerals to be added to existing leases without additional royalty, raised the NMEDT levy from two to three percent of royalty, and created a statutory framework for electronic mineral exchanges.
As of early 2026, the Ministry of Mines had auctioned 46 critical mineral blocks across six tranches, including seven with rare earth elements.
The government announced the National Critical Mineral Stockpile in October 2025, with a two-month rare earth reserve and a ₹500 crore seeding budget. In November, the Cabinet approved the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPM) with an outlay of ₹7,280 crore, targeting 6,000 tonnes per annum across five units. The Union Budget 2026–27 introduced Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, removed basic customs duty on monazite, and exempted capital goods for critical mineral processing.
Considered as a stack, these measures cover almost every link the policy lever can reach, from exploration and auctioning to fiscal support and reserve-building. Yet the same structural deficit recurs. The REPM scheme funds the final magnet stage. The Rare Earth Corridors are intended to function as integrated mining-to-manufacturing clusters, but do not yet define an operational footprint for the midstream separation and refining facilities that would supply them. Domestic processing capacity remains limited to IREL, which manufactures low-value rare earth chlorides and oxides at ageing facilities. The steps where eighty to ninety percent of the value sits — advanced separation, metallisation, and alloying — remain outside the country, where Chinese IP is most entrenched. India imports nearly all its permanent magnets and consumes 4,000 to 5,000 tonnes annually.
On the domestic resource side, the picture is more encouraging. The Geological Survey of India has estimated 7.23 million tonnes of rare earth oxides in 13.15 million tonnes of monazite along the coastal belts of Andhra Pradesh, Odisha, Tamil Nadu, and Kerala. The 5.9 million tonnes of lithium found in Jammu and Kashmir await verification. Translating reserves into supply depends as much on overseas partnerships as on mines at home.
India's bilateral mineral relations have expanded considerably. KABIL holds five lithium brine blocks in Argentina, and a Comprehensive Economic Partnership Agreement with Chile — holder of the world's largest lithium reserves — is under negotiation. India’s February 2026 deal with Brazil added a second South American anchor.
The Australia partnership is the closest match to what India actually needs. The India–Australia Critical Minerals Investment Partnership has identified five projects worth roughly USD 600 million, including 20 percent stakes in the Mount Holland and Andover lithium projects. Its technology transfer, joint research, and downstream processing components offer industrial learning that pure offtake agreements cannot.
India and France signed a Joint Declaration of Intent on critical minerals covering exploration, processing, and recycling, and upgraded their relationship to a Special Global Strategic Partnership.
Two further developments warrant attention. India and France signed a Joint Declaration of Intent on critical minerals covering exploration, processing, and recycling, and upgraded their relationship to a Special Global Strategic Partnership. India and the United States, meanwhile, are reported to be nearing a bilateral critical minerals agreement covering supply chains for advanced manufacturing, clean energy, and emerging technologies. If finalised on the terms proposed, it would be the most significant bilateral mineral agreement India has signed.
The multilateral landscape has shifted. India has become a member of the Minerals Security Partnership (MSP), which was succeeded by the Forum on Resource Geostrategic Engagement (FORGE) in February 2026. Pax Silica, launched in December 2025 with thirteen signatories including India, frames mineral access as part of a broader technology stack for the AI era — encompassing energy, advanced manufacturing, semiconductors, and computing. The Quad Critical Minerals Initiative remains a key pillar of Indo-Pacific supply chain cooperation.
The significance of these forums lies not just in the financing they mobilise but also in the standards they help establish. They are where ESG benchmarks, traceability requirements, downstream-processing preferences, and the concept of a "trusted" supply chain are being negotiated. India's seat at the table is its primary means of influencing rules that its companies will eventually be required to abide by.
First, the midstream is undercapitalised. The REPM scheme funds the final magnet stage, while the Rare Earth Corridors and customs reliefs address inputs and clusters. Neither directly invests in separation, refining, and metallisation — the stages where China's control is most entrenched and IP barriers are highest. A midstream production-linked incentive tied to the output of high-purity rare earth oxides and metals would directly address the constraint on domestic value capture. The know-how exists among Australian, French, and Japanese refining experts operating commercial separation lines, and India's existing partnerships offer a practical path to acquiring it.
Until separation, refining, and metallisation move onshore at a commercial scale, backed by dedicated incentives and partnership terms built around technology transfer rather than offtake, India will continue to mine, stockpile, and assemble at the edges of a value chain its policy stack increasingly resembles but does not yet command.
Second, India's bilateral mineral contracts are biased towards access rather than capability. The Australia partnership is the only pact since 2024 that functions as a genuine partnership; the others are MoUs or joint declarations that have yet to incorporate enforceable provisions for technology transfer, joint processing facilities, or co-investment in midstream infrastructure. The operational terms — local processing thresholds, IP-sharing arrangements, and joint-venture equity structures — will be central to New Delhi's follow-through on the Brazil and France pacts and to the ongoing US negotiations. The Pax Silica framework, which links mineral access to semiconductor and AI supply chains, offers a useful platform for advancing these conditions.
Third, implementation of the Rare Earth Corridors must be accompanied by clear frameworks governing land acquisition, environmental and Coastal Regulation Zone clearances, Centre-State royalty sharing, and the handling of radioactive waste from deposits containing monazite. Without these, the corridors risk becoming a budget line rather than functioning industrial clusters. A dedicated chapter on critical and strategic minerals under the MMDR Act, providing longer lease tenure, faster central clearances regardless of lease area, and royalty structures that incentivise downstream processing, would help develop this infrastructure.
India's critical minerals policies and initiatives — from the NCMM and the MMDR Amendment to the REPM scheme, the Rare Earth Corridors, the Critical Mineral Stockpile, the Pax Silica seat, and the bilateral pacts with Brazil, France, and (soon) the United States — are moving in a coherent direction. What is missing is sequencing around the binding midstream constraint. Until separation, refining, and metallisation move onshore at a commercial scale, backed by dedicated incentives and partnership terms built around technology transfer rather than offtake, India will continue to mine, stockpile, and assemble at the edges of a value chain its policy stack increasingly resembles but does not yet command.
Akarsh Srivastava was a Research Intern with the Centre for New Economic Diplomacy at the Observer Research Foundation.
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Akarsh Srivastava is an intern at the Centre for New Economic Diplomacy at the Observer Research Foundation. ...
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