India Bolsters Critical Minerals Strategy with MMDR Act Amendments in 2025

India took a significant step toward securing its critical minerals supply chain by preparing to introduce amendments to the Mines and Minerals (Development and Regulation) Act (MMDR Act) in Parliament. These legislative changes, expected to be tabled during the monsoon session, aim to enable state-funded acquisitions of critical mineral assets overseas and streamline domestic mining operations. The move is part of India’s broader National Critical Mineral Mission (NCMM), launched in January 2025, to ensure self-reliance in resources vital for clean energy, electronics, and defense sectors. With global supply chains tightening and geopolitical risks rising—particularly due to China’s dominance in rare earth elements—these amendments underscore India’s urgency to bolster its mineral security.

Key Objectives of the MMDR Act Amendments

The proposed amendments to the MMDR Act, last revised in 2023, are designed to address the core issue of critical mineral availability, as emphasized by a senior government official quoted in The Economic Times. The key objectives include:

1. State-Funded Overseas Acquisitions: The amendments will allow the use of funds from the National Mineral Exploration Trust (NMET), which holds a corpus of over ₹6,000 crore, to finance the exploration, acquisition, and development of critical mineral assets abroad. The NMET, currently funded by a 2% royalty contribution from mining leaseholders, will be renamed to include “development” in its title, reflecting its expanded mandate. This move is critical for securing resources like lithium, cobalt, copper, and rare earth elements, which are essential for electric vehicles (EVs), solar panels, and energy storage systems.

2. Disposal of Mineral Dumps: The amendments propose allowing the sale of low-grade mineral dumps from captive mines through lump-sum transactions, subject to state approval and additional fees. Over half of the minerals produced in captive mines are currently unusable due to low grade or unsuitability, leading to significant waste accumulation. This change aims to unlock economic value from these dumps and reduce environmental impact.

3. Streamlined Regulations for New Minerals: The reforms will simplify the process of including newly discovered minerals and contiguous areas in existing mining leases. Leaseholders of deep-seated mineral resources can apply for a one-time permit extension, capped at 10% of the existing leased area, to enhance exploration efficiency. This provision is expected to encourage the extraction of critical minerals like germanium and cadmium found alongside mainstream minerals like lead and zinc.

4. Support for the National Critical Mineral Mission: The amendments align with the NCMM’s goals of securing domestic and overseas supplies, strengthening value chains, and fostering innovation in mining, processing, and recycling. The mission, with a budget of ₹34,300 crore from 2024-25 to 2030-31, includes ₹5,600 crore for overseas exploration and risk coverage, with funds drawn from NMET.

Context: Geopolitical and Economic Imperatives

India’s push for critical minerals is driven by both economic and geopolitical factors. The country heavily relies on imports for minerals like lithium, cobalt, and nickel, which poses a strategic vulnerability, particularly given China’s control over 60% of global rare earth mining. China’s export restrictions on rare earths, intensified since April 4, 2025, have crippled India’s electric two-wheeler sector, slashing production by half. These restrictions highlight the urgency of diversifying supply chains and reducing dependence on single suppliers.

The global race for critical minerals has intensified due to their role in clean energy transitions and advanced technologies. India’s amendments aim to shield the country from supply shocks, as noted in a Business Standard report, by combining overseas acquisitions with domestic regulatory reforms. The government’s earlier elimination of customs duties on most critical minerals in the 2024-25 Union Budget further supports this strategy by encouraging domestic processing and reducing import costs.

Domestically, the amendments address inefficiencies in legacy mining leases, particularly those allocated before 2015 without auctions. Over 2,500 such leases, many idle, could be revitalized to extract critical minerals like lithium and cobalt, which were previously discarded as waste due to restrictive regulations. By allowing miners to obtain separate licenses for newly discovered minerals without fresh auctions, the reforms aim to unlock the potential of these mines and support India’s clean energy goals by 2070.

Implementation and Financial Framework

The NMET, with its ₹6,000 crore corpus, is central to the amendments’ implementation. Approximately ₹4,000 crore is earmarked for risk coverage in foreign sourcing, while ₹1,600 crore will support overseas exploration activities from 2024-25 to 2030-31. These funds will facilitate projects like India’s recent acquisition of mineral blocks in Zambia, spanning 9,000 square kilometers, for copper and cobalt exploration.

The amendments also introduce a tailings policy to incentivize the recovery of critical minerals from mining waste, such as overburden, fly ash, and red mud. A ₹1,500 crore recycling scheme under the NCMM, with ₹100 crore from NMET, will promote advanced technologies for extracting minerals from tailings. Additionally, the government plans to establish processing parks and strategic stockpiles to ensure supply resilience, with ₹500 crore allocated per park.

Broader Impact and Challenges

The MMDR Act amendments are a cornerstone of India’s strategy to achieve self-reliance in critical minerals, as outlined in the NCMM. The mission includes 1,200 exploration projects by the Geological Survey of India (GSI) from 2024-25 to 2030-31, targeting 24 critical minerals, including lithium, cobalt, vanadium, and rare earth elements. The government also aims to facilitate 1,000 patents in the critical minerals sector by 2031, emphasizing innovation in exploration and processing.

However, challenges remain. India’s limited progress in domestic exploration, despite policy reforms, has drawn criticism, with analysts pointing to the need for aggressive fiscal incentives and capital support to compete with countries like Australia and Brazil, which allow broader mineral extraction within leased areas. State-level implementation has also been slow, with only 44 critical mineral blocks auctioned from 2020-21 to 2023, though the Centre’s takeover of exploration licensing in 2024 has accelerated efforts.

Environmental concerns are another hurdle. The International Energy Agency has flagged the environmental impacts of mining critical minerals, including biodiversity loss, water depletion, and pollution. India’s amendments include provisions for sustainable practices, such as mandatory restoration and environmental monitoring, but their effectiveness will depend on rigorous enforcement.

Critical Perspective: Opportunities and Risks

While the amendments signal India’s proactive stance on mineral security, they also raise questions about execution and geopolitical implications. The reliance on NMET funds for overseas acquisitions is a bold move, but its success hinges on identifying viable assets and navigating complex international regulations. India’s partnership with the Quad Critical Minerals Initiative (involving the US, Japan, and Australia) could provide strategic leverage, but competition from China and other global players remains fierce.

Domestically, the reforms could revitalize idle mines and reduce waste, but the lack of advanced technology and expertise in processing critical minerals may limit outcomes. The Federation of Indian Mineral Industries has called the amendments a “low-hanging fruit” for quick results, yet scaling up requires significant private sector investment, which the tailings policy and royalty structure changes aim to attract.

Moreover, the amendments’ focus on state empowerment for dump sales and lease extensions could lead to uneven implementation across states, given historical delays in state-level auctioning. The government’s push for centralized control over critical mineral auctions since 2023 may mitigate this, but coordination with states remains critical.