NEW DELHI: Against the backdrop of disrupted global supply chains and intensifying competition for strategic resources, the Union Budget on Sunday unveiled a series of targeted measures on critical minerals and rare earths, signalling India’s intent to reduce external dependence in sectors vital to clean energy, defence and emerging technologies.
Finance Minister Nirmala Sitharaman proposed exemption from basic customs duty on the import of capital goods required for processing critical minerals in India — a move aimed at accelerating domestic value addition in materials that underpin electric mobility, renewable energy systems and advanced manufacturing.
The initiative comes at a time when access to critical minerals has emerged as a geopolitical flashpoint, with supply chains concentrated in a handful of countries and increasingly subject to export controls and trade weaponisation.
Just last month, Union Minister Ashwini Vaishnaw attended a Critical Minerals Ministerial meeting in Washington, where participants expressed strong interest in addressing vulnerabilities in global supply chains. The US shared details of its ongoing investments and plans to build resilient, secure and diversified sourcing networks for these materials.
External Affairs Minister S Jaishankar is also expected to travel to the US later this week to attend another critical minerals ministerial hosted by US Secretary of State Marco Rubio in Washington DC on February 4, underscoring India’s growing role in global supply-chain diversification efforts, particularly as the US and its partners seek to reduce dependence on dominant suppliers such as China.
Complementing the customs duty push, the Budget proposed incentivising prospecting and exploration by including select critical minerals in Schedule XII of the Income Tax Act, enabling tax deductions on exploration expenditure — a key step to address bottlenecks in building a domestic ecosystem.
The strategic thrust was further underlined by renewed emphasis on rare earth permanent magnets, a segment dominated globally by China and central to electric vehicles, wind turbines and defence platforms. Recalling the launch of the Rare Earth Permanent Magnet Scheme in November 2025, Sitharaman announced fresh support for mineral-rich states — Odisha, Kerala, Andhra Pradesh and Tamil Nadu — to establish dedicated Rare Earth Corridors spanning mining, processing, research and manufacturing.
Extending the clean energy push, the Budget proposed extending customs duty exemption on capital goods used for lithium-ion cells to battery energy storage systems, and exempting sodium antimonate, a key input for solar glass.
Presenting the Budget, Sitharaman cautioned that global trade and multilateralism were under strain, even as new technologies sharply increased demand for energy, water and critical minerals.
Together, the measures reflect a calibrated response to a changing geopolitical landscape, as India seeks to secure strategic resources, de-risk supply chains and position itself as a credible manufacturing and processing hub in a fragmented global economy.