Funding crunch could stall India’s critical minerals mission, warns Exim Bank study

As India sharpens its focus on securing critical minerals vital for clean energy and tech-led growth, a new study by Exim Bank underscores the urgent need to ramp up investments—both domestically and overseas—in minerals such as lithium, cobalt, nickel, graphite, and copper.

These minerals are crucial for strategic sectors including defence, electronics, telecommunications, and renewable electricity generation.

The report flags India’s heavy dependence on imports for these inputs, warning that the situation could worsen if corrective steps are not taken.

“Out of the 30 identified critical minerals by the Ministry of Mines, India is 100% import-dependent in 10 of them. With regard to this study, India is 100% import-dependent for 3 of the 5 minerals analysed—namely, cobalt, lithium, and nickel. India relies on imports to meet around 60% of its graphite demand. For copper, India has, in recent years, turned into a net importer since the closure of Vedanta’s Sterlite Copper smelter in Thoothukudi, Tamil Nadu, in 2018, which drastically reduced India’s copper production capacity,” the study revealed.

To mitigate supply risks, the government has adopted a twin-track strategy—boosting domestic exploration while acquiring assets overseas. The Union Budget 2025–26 identified mining as one of six sectors for deep reforms over the next five years. Reforms include the elimination of Basic Customs Duty on scrap and waste of 12 critical minerals. Additionally, in January 2025, the Centre launched the ₹16,300-crore National Critical Mineral Mission (NCMM), with a projected investment of ₹18,000 crore by PSUs and other entities.

However, the Exim Bank study notes that mineral development remains fraught with risks—long gestation periods, price volatility, insufficient geological data, and lack of advanced processing technology.

“Investment in the critical minerals sector in India may involve several risk factors like (i) delayed revenue streams given the highly capital-intensive nature of mining, (ii) volatile commodity prices, (iii) insufficient geological data, (iv) lack of advanced mineral processing technology, to name a few,” the study said.

To address funding gaps, the report calls for exploring public-private partnerships (PPPs), particularly for overseas acquisitions. A proposed structure involves setting up special purpose vehicles where government firms hold a majority stake, allowing risk isolation and securitisation.

For domestic projects, the report recommends alternative financing models like offtake agreements, innovation funds focused on mineral processing R&D, and green bonds to support recycling infrastructure.

“For domestic critical mineral projects, India must pursue alternative funding mechanisms such as offtake agreements with private companies,” the study added.

The study cites Canada’s $1.5 billion Strategic Innovation Fund as a model for nurturing innovation across the mineral value chain.

The study highlights that India’s energy transition goals hinge on secure and diversified access to critical minerals. Without building resilient supply chains and production capabilities, the country risks falling behind in its clean energy and technology ambitions.