China's Export Restrictions
On January 2, 2025, China added 28 U.S. entities to its export control list, restricting access to critical minerals like tungsten, lithium, and gallium.
These minerals are essential for high-tech industries, including aerospace, semiconductors, and electronics.
China’s strategic approach targets minerals critical to Western nations while avoiding disruptions to its own industries and export sectors.
India's Challenges in Critical Mineral Development
India has faced difficulties in developing its own critical minerals, including lithium deposits discovered in Jammu and Kashmir, which remain underdeveloped.
Only 48% of the mineral blocks available for auction in recent years have been sold.
Despite government efforts like the establishment of Khanij Bidesh India Ltd. (KABIL) and the Mines and Minerals Amendment Act, progress has been slow.
Reforms and Limited Results
The 2023 Mines and Minerals Amendment introduced exploration licenses to attract foreign and specialized exploration firms.
These reforms are designed to de-risk early-stage operations and encourage private-sector investment, but results have been underwhelming, with few foreign participants and limited progress on mining license auctions.
India's resource classification system and low demand for exploration licenses have hindered progress.
Need for Fiscal Incentives and Better Data
High-quality geological surveys are crucial to addressing the “information asymmetry” between miners and the government.
A potential solution could be offering upfront fiscal incentives for exploration, similar to the approach used in semiconductor manufacturing, to help unlock value in critical minerals mining and exports.
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