India's Strategic Shift: New Mineral Royalty Framework Signals Accelerated Push for Domestic Supply Independence

India is executing a comprehensive restructuring of its mineral taxation system, with sweeping changes to royalty rates on critical minerals including graphite, caesium, rubidium, and zirconium—all essential transition metals and minerals for modern technology infrastructure. The recalibration represents New Delhi’s most aggressive move yet to establish a self-reliant supply chain and curb dependence on Chinese dominance in the global minerals market.

Policy Framework and Specific Rate Adjustments

The newly approved royalty structure introduces differentiated pricing based on mineral purity and market conditions. High-purity graphite (minimum 80 percent fixed carbon content) will now face a 2 percent royalty calculated against average sale prices set by the Indian Bureau of Mines. Lower-grade graphite carries a steeper 4 percent rate. Both caesium and rubidium have been assigned 2 percent royalties on the average price of contained metal in raw ore, while zirconium receives a 1 percent levy.

According to India’s Union Cabinet announcement in mid-November, this tiered approach will stimulate competitive mineral auctions and encourage greater private sector participation in exploration activities. The framework specifically targets the unlocking of associated critical minerals such as lithium, tungsten, rare earth elements, and niobium that are typically found alongside primary target minerals.

Market Dynamics and Global Context

China’s grip on the global critical minerals ecosystem remains formidable—the nation produces over 80 percent of the world’s rare earth elements and controls substantial refining capacity for battery metals. Recent years have witnessed Beijing implementing tighter export controls, intensifying supply chain vulnerabilities for nations reliant on these resources.

India’s mining auction program reflects this geopolitical urgency. The sixth tranche, which commenced in September, distributed at least nine mineral blocks for competitive bidding, comprising five graphite deposits, two rubidium reserves, and single blocks each for caesium and zirconium. Each of these minerals plays a pivotal role in India’s energy transition: graphite powers lithium-ion batteries in electric vehicles, zirconium serves in nuclear reactor construction, caesium enables precision timing infrastructure including GPS systems, and rubidium supports fiber optic and night-vision technologies.

Broader Policy Architecture and Investment Commitments

This royalty restructuring aligns with the Modi administration’s multifaceted strategy to secure strategic resource independence. Earlier in 2024, New Delhi green-lit a US$1.9 billion initiative to source critical battery and electronic materials. Additionally, in early November, reports emerged that India planned to substantially expand its production-linked incentive program for rare earth magnet manufacturing—potentially tripling it to over US$788 million from an initial US$290 million proposal.

Once approved, this expanded program aims to establish an integrated rare earth magnet supply chain specifically tailored to electric vehicle manufacturing, renewable energy infrastructure, and defense-grade applications. The commitment signals India’s intention to capture entire value chains rather than merely extract raw materials.

Workforce Development as Critical Enabler

Infrastructure and policy reforms alone cannot sustain mineral sector growth without adequate human capital. India’s Ministry of Mines, in collaboration with the Skill Council for Mining Sector, has launched an ambitious initiative targeting 5.7 million trained workers across mining-related occupations by 2030. A comprehensive skills gap analysis covering 2025-2030 will identify workforce requirements and establish development pathways for a “future-ready” labor force capable of managing expanded mining operations.

Government officials have emphasized that detailed action plans will address training delivery mechanisms to match accelerating sector demand in the coming years.

Current Capacity Gap and Strategic Targets

India’s present mineral position underscores the magnitude of the transformation underway. The nation imports approximately 60 percent of its graphite requirements and remains a marginal producer of most other critical minerals despite significant domestic reserves. Under current administration targets, mining’s contribution to GDP is slated to more than double to 5 percent by 2030—a transformation requiring sustained policy support and substantial capital deployment.

The convergence of royalty rationalization, direct investment programs, incentive structures, and workforce preparation suggests India is pursuing a comprehensive, long-term strategy rather than tactical adjustments.