Critical minerals are the new oil. India can't afford to depend on China

The Print

2 days ago

Currently, India is heavily dependent on imports for critical minerals such as lithium, cobalt, nickel, and rare earth elements (REE). Much of this supply comes through re-export channels, which creates a third-level dependency while exposing us to potential supply shocks and strategic coercion. Mineral security is no longer just an economic concern but a national security imperative, underpinning the country's ambitions in clean energy, defence self-reliance, and advanced manufacturing.
At the Summit, Modi warned against the weaponisation of critical minerals and stressed the need to work together to make supply chains secure and reliable. Other global leaders have also echoed similar concerns at the G20, Quad, and BRICS summits, and have discussed collaborating to secure and diversify critical mineral supply chains.
Critical minerals have now become instruments of geopolitical bargaining and means to assert domestic autonomy and security. Prime Minister Narendra Modi's recent visit to Argentina and meeting with Chilean President, Gabriel Boric, the two legs of the lithium triangle, on the sidelines of the recently held BRICS summit in Brazil, were strategically aimed at exploring cooperation and engagement on critical minerals.
The refining wall of China
Globally, China holds roughly 62 per cent of lithium refining capacity, 33 per cent for nickel, 77 per cent for cobalt, 87 per cent for graphite, and 76 per cent for REEs, according to the International Energy Agency's (IEA) Global Critical Minerals Outlook 2025. This underscores China's overwhelming dominance in supply chains, even though it does not host most raw material reserves.
Compared to 2023, India's lithium imports from China surged by roughly 921 per cent in 2024, while graphite imports rose 85 per cent between 2022 and 2024 and Nickel imports jumped 137 per cent in 2024. Such dominance gives Beijing an asymmetric leverage over supply chains vital to clean-tech sectors and key defence applications, including advanced electronics, missile systems, and communication technologies. As a result, securing reliable access to critical minerals has become a strategic vulnerability for India's ambitions in developing a robust clean tech and defence ecosystem.
The implications of this centrality are intrinsically geopolitical. Recent export restrictions by China on REE have directly affected the electric vehicle (EV) sector globally, even forcing production halts. This, in turn, undermines clean mobility targets, as REEs are essential components in EV motors.
Additionally, certain elements are indispensable to India's defence sector. While China demanded invasive end-use disclosures to ensure materials aren't used for defence, despite India's compliance, it was met with a deliberate denial of access. Such wanton weaponisation of mineral supply chains, creating market distortions, is heightening global concerns over the monolithic control of upstream activities.
India's multi‑vector strategy
On the positive side, by following a multi-alignment approach and strengthening bilateral ties, India has diversified early-stage sourcing from countries such as Zambia, Mongolia, and the Democratic Republic of Congo (DRC). It has pursued technology transfer discussions with Japan; engaged internationally through platforms like the Quad Security Dialogue, Minerals Security Partnership, Critical Raw Materials Club (EU+), and the Supply Chain Resilience Initiative.
Domestically, efforts have advanced through the National Critical Minerals Mission, overseas acquisitions by Khanij Bidesh India Ltd. (KABIL), extraction and recycling by Indian Rare Earths Ltd. (IREL), and inclusion of private players in exploration. However, it may not be sufficient for supply chain optimisation as the dependency on Chinese processing and refining capacities continues to exert an outsized influence, leaving India vulnerable.
In light of the constantly shifting geopolitical tensions armed with resource nationalism at the core, India must consciously invest in domestic downstream capabilities and look for alternative, resilient supply chains. While China does offer cost advantages backed by decades of state investment and economies of scale, this advantage is exposing fault lines unlike before. A single‑point dependence may spark supply shocks, spikes in infrastructure costs, and stalls in critical sectors like defence and clean energy, all pivotal for an Aatmanirbhar Bharat.
Also read: China has mastered the art of dumping. India must take a cue from US to fight back
Strengthening mineral sovereignty
While India must continue to pursue the 'China+1' sourcing strategy, mineral sovereignty demands a more strategically fortified approach, one that combines global partnerships, security-centric stockpiling agreements and more. However, it must be understood that access is not autonomy. India must now begin building its technological capabilities with a long-term vision—even if this appears financially less competitive in the short term—for strategic reasons. Strategic autonomy cannot be benchmarked solely on cost-efficiency metrics. Instead, the calculus must factor resilience, control, and long-term supply security.
This calls for public-private collaboration, targeted incentives, and strengthening of Indian institutions like the National Critical Mineral Mission Outreach Forum and defence research organisations to facilitate long-term investments, research and development, and stockpiling. In essence, the cost of not strengthening domestic capacity is far greater than the dependency and vulnerability, particularly in the context of building and fortifying the defence and strategic manufacturing ecosystem.
Initial investments may not yield immediate commercial returns, but they will help India develop long-term technical expertise, embed resilience in our systems planning, fostering innovation ecosystems—all of which will contribute toward reducing dependency and geopolitical exposure. Policymakers must push for a mindset shift: critical mineral security should be seen as a public good.
India developed its domestic oil refining capacity through early investments by both the public and private sectors, and infrastructure planning. Today, it has enabled the country to import crude oil of any grade from countries like Russia and process it independently. The same strategic approach must now be applied to critical minerals.
Ultimately, India must transition from being a passive consumer in global mineral markets to an active ecosystem builder—one that can source, refine, and deploy strategic minerals while empowering emerging economies to navigate shared mineral and geopolitical challenges. Critical mineral security is no longer optional; it is national security by another name.
Dr. Debajit Palit is the Centre Head and Meheli Roy Choudhury is a Research Consultant at Centre for Climate Change & Energy Transition, Chintan Research Foundation. Views are personal.
(Edited by Ratan Priya)