• India is 100% import dependent for most of the critical minerals supply except copper, gallium, graphite, cadmium, phosphorus, potash, and titanium.
• As the balance of power shifts across countries, the critical mineral supply chains may get affected due to the partnership between China and Russia, as both are its major suppliers. 
• China produces 60% of the world’s rare earth elements.
• This may hamper India’s energy security.
• One crucial obstacle for production of critical minerals in India is the lack of adequate mineral exploration and import-dependency, especially for the critical minerals.

India as a producer of crucial minerals

• India being a producer of crucial minerals, the resource sector has the potential to impact environmental sustainability, social inclusion, and economic development.
• The production of the mining industry across India has increased by about 12% and mining contributes to 2.5% of the Gross Domestic Product (GDP).
• It plays a vital role in the national economy, as it employs more than half a million people.
• It contributes to the country''s revenue through exports, royalty, taxes and duties.
• The ministry of mines has announced a list of 30 critical minerals as essential for the growth of many sectors in India.
• These are required to manufacture green technologies such as wind turbines, solar panels, batteries, and electric vehicles.

History of Mineral exploration:

First Come First Serve (FCFS) system:

• Economic liberalisation (early 1990s) and the National Mineral Policy of 1993 has paved the way for private investment for mineral exploration in India.
• Private companies could apply for prospecting and reconnaissance exploration permits in India under the FCFS system for right to explore, mine or sell any discovered minerals.
• The report of a working group under the Twelfth Five-Year Plan (2011) highlighted the importance of the FCFS system to encourage private investment in mineral exploration.
• The report also stated that auctioning already-explored mineral blocks would discourage private investment.
• The Supreme Court (SC) judgement held that the FCFS method of natural resource allocation was susceptible to manipulation, favouritism and misuse.
• SC has stated that auctioning as a system of natural resources allocation, should not be the only norm even if it is profitable.
• As there are high risks and huge investments in mineral exploration, auctions would deter private investment.

Non-Exclusive Reconnaissance Permit (NERP):

• The Amendment to the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) in 2015 has replaced the FCFS basis of mineral allocation with auctions.
• India saw a steep decline in mineral exploration activities and many leading global exploration companies withdrew their investments from India in 2015.
• The NERP was introduced to enhance exploration activities, but it was discontinued due to lack of takers.
• The NERP was ineffective as it did not confer any mining rights on exploration companies upon discovering mineral resources.

National Mineral Exploration Trust (NMET):

• The NMET was established in 2015 to provide incentives for expediting investment in exploration by public and private entities.
• It was funded through a cess on operating mines, where about 90% of this has been allocated to projects by the Geological Survey of India (GSI).
• Private exploration agencies have utilized less than 1% of the NMET expenditure.
• Thus, the NMET did not succeed in increasing the participation of private exploration companies.

Exploration Licenses (EL):

• The Ministry of Mines has issued a notice for public consultation on the introduction of Exploration Licenses (ELs) to incentivize the exploration of deep-seated and critical minerals.
• The proposed EL would be granted through auctioning an area suggested by any person to the state government.
• Eligible explorers would bid on their desired share percentage of the auction premium payable by Mining Leaseholder to the state (subject to successful discovery and auction).
• The lowest bid would win the EL auction and receive revenue after a successfully discovered mine is auctioned and operationalized.
• As this process may take years or lead to failed outcomes, it needs to offer more incentives for private explorers.
• Under the present regime, private companies can also conduct some exploration activities after being granted a Composite Licence (CL).
• CLs are granted for areas with inadequate evidence of the existence of the mineral and allow the leaseholder to undertake both exploration and mining operations.
• Instead of introducing a new license for exploration, the existing CL regime should be tweaked to give impetus to the reconnaissance of deep-seated mineral exploration.

Recommendations for greenfield blocks:

• It was given for those greenfield blocks who lack knowledge on presence of minerals.
• The eligible parties should bid on the share to be paid to the state government on successful discovery and mining.
• The proposed CL should expand its scope to allow reconnaissance for maximum area grantable to exploration companies.
• The reconnaissance component of the CL may be granted for an area up to 1000 sq km.
• It should be ensured to prevent companies for conducting exploration activities within a specified time.
• The leaseholders should provide periodic reports on the evidence of work done.
• They should relinquish 75% of the original area after 3 years of reconnaissance.
• It shall allow exploration companies to sell or mine any resources they discover.
• It shall address the government’s concerns about granting mineral concessions through auctions.
• The needs of exploration companies would be fulfilled, as they would have the right to mine their discovered resources.
• Development of globally competitive exploration industry will enable the country to be self-sufficient for the raw materials needed for manufacturing, green transition, etc.

As one of the fastest-growing economies of the world, there is an increased pressure for India to increase the production of metals/minerals in order to meet the growing demand. India''s commitment to the Paris Agreement entails the requirement of crucial minerals for the transition to a lower-carbon economy. The Make in India initiative for expansion of the industrial sector would further increase the mineral resources demand. A holistic approach should be adopted for the mining industry by alignment of the government and private sector.