India’s efforts to advance its clean energy transition and achieve net-zero emissions by 2070 face supply chain challenges related to critical minerals, according to a recent report by the Centre for Social and Economic Progress (CSEP).
The report, authored by Karthik Bansal and Rajesh Chadha, underscores the importance of establishing resilient supply networks to support India’s renewable energy goals. With rising demand for minerals such as lithium, cobalt, and rare earth elements—key components in solar panels, wind turbines, electric vehicles, and advanced batteries—ensuring stable access to these resources has become increasingly vital.
The study highlights the global concentration of mineral extraction and processing, noting that a significant portion of these activities occurs in a few key regions. For instance, Australia, Argentina, and Chile collectively accounted for 76% of global lithium production in 2022, while the Democratic Republic of Congo hosts several of the world’s largest cobalt mines. The report also points to challenges related to securing steady mineral supplies, as companies from select nations have a strong presence in mining operations worldwide.
India has initiated critical mineral auctions to enhance domestic availability, but success rates have been limited. The report notes that only 37% of the auctioned blocks have been successfully allocated, with some, such as lithium blocks in Jammu and Kashmir, receiving no bids. Additionally, certain high bids—such as a 752.5% increase in auction pricing—have made the process more complex.
To strengthen its supply chain, the report suggests that India attract global mining companies with expertise in resource extraction and explore funding mechanisms such as offtake agreements—long-term contracts that secure future supply. Additionally, scaling up domestic processing infrastructure for minerals like copper and rare earth elements is crucial for reducing reliance on imports.
Currently, India’s mineral processing capacity lags behind global counterparts, with China processing nearly 60% of the world’s lithium. India’s refined copper imports have increased from 151,964 tonnes in 2019-20 to 155,038 tonnes in 2020-21, and demand for green technology applications is projected to rise significantly by 2047.
The report also highlights how leading international firms conduct much of their processing operations outside India. Companies such as Albemarle, Tianqi Lithium, and Ganfeng Lithium operate processing facilities primarily in China, influencing market access and pricing.
Financing remains another challenge, as global mineral projects are often backed by long-term offtake agreements, which can limit availability for other buyers. Many major automakers and technology firms have already secured such agreements, further tightening the market for critical minerals.
To address these challenges, the CSEP report recommends incentivizing domestic mineral processing, promoting recycling from e-waste and end-of-life batteries, and strengthening partnerships with regional institutions such as QUAD and ASEAN. Aligning production-linked incentives (PLIs) with upstream raw material procurement could also bolster India’s clean energy sector.
The Indian government has implemented initiatives such as the Production Linked Incentive (PLI) scheme to support domestic manufacturing of solar PV modules, electric vehicle components, and advanced chemistry cells. However, the report notes that additional steps are needed to build upstream capacity for raw materials and components.
Experts suggest a multi-faceted approach to enhance India’s mineral supply resilience, including expediting exploration licenses, providing fiscal incentives for domestic processing facilities, and encouraging private-sector participation in extraction and refining. Strengthening diplomatic ties to establish joint ventures with resource-rich nations could further support long-term access to critical minerals while ensuring sustainable mining practices.
As India advances its green energy initiatives, addressing supply chain vulnerabilities will be essential to meeting climate targets and ensuring economic and energy security. Proactive measures will be key to reducing import dependence and positioning India competitively in the global clean energy landscape.
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