In a move aimed at strengthening India’s domestic mining sector and reducing reliance on imports, the Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved new royalty rates for four key critical minerals: graphite, zirconium, rubidium, and caesium. The decision is expected to encourage domestic production, attract investment, and provide greater clarity to companies participating in upcoming mineral block auctions.

Union Minister of Information Technology, Railways, and Information & Broadcasting Ashwini Vaishnaw briefed the media following the cabinet meeting, noting that “there are some critical minerals available in the country whose royalty structure needs to be changed. A very high royalty was imposed on these materials, so that has been reduced to increase their production.”

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Key Changes in Royalty Structure

The Cabinet approved amendments to the Second Schedule of the Mines and Minerals (Development and Regulation) Act, 1957, introducing significant modifications in how royalties will be calculated for the selected minerals. The changes include:

• Graphite: The royalty will now be levied on an ad valorem basis rather than per tonne. High-grade graphite with 80% or more fixed carbon will attract a 2% royalty of the average sale price, while lower-grade graphite will carry a 4% royalty. This shift from a fixed-per-tonne system to a percentage-of-sale system is designed to make mining more economically viable and responsive to market conditions.
• Zirconium: A flat 1% royalty has been fixed.
• Rubidium and Caesium: Each will now have a 2% royalty rate.

These amendments aim to provide clarity and consistency for investors planning to participate in mineral auctions, reducing ambiguity regarding costs and enhancing predictability in the sector.

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Strategic Significance of the Minerals

The four minerals are critical for India’s growing industrial and technological sectors. Graphite, zirconium, rubidium, and caesium are used extensively in electric vehicle (EV) batteries, electronics manufacturing, and strategic industries. By lowering royalty rates, the government aims to stimulate domestic production and reduce dependence on imports, which currently constitutes a significant portion of India’s requirements.

For instance, India imports nearly 60% of its graphite needs, highlighting the importance of boosting domestic mining capacity. The government currently operates nine working graphite mines, with 27 auctioned blocks, 20 blocks handed over by the Geological Survey of India (GSI) and the Mineral Exploration Corporation Limited for auction, and another 26 under exploration.

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Boosting Domestic Auctions

India is already actively auctioning blocks of these critical minerals. In September 2025, the government issued the sixth tranche of notices inviting tenders for new mineral blocks, which included five graphite blocks, two rubidium blocks, and one block each for caesium and zirconium. The revised royalty rates are expected to enhance participation in these auctions by making the projects more financially attractive to investors and mining companies.

Vaishnaw emphasized that the decision will not only improve production of the four minerals but will also have a positive effect on other critical minerals associated with them, such as lithium, tungsten, rare earth elements, and niobium. By creating a more favorable royalty environment, the government intends to reduce import dependence and support domestic industries that rely on these materials.

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Policy Rationale

The cabinet’s move aligns with India’s broader strategy to secure critical minerals essential for technological advancement and national security. By rationalizing royalty rates, the government seeks to:

1. Increase Domestic Production: Lower royalties reduce operational costs, encouraging companies to develop mines within India rather than relying on imports.
2. Reduce Import Dependence: By boosting domestic supply, India aims to decrease reliance on foreign sources, which is crucial for strategic and industrial autonomy.
3. Attract Investment: Clear and predictable royalty structures make investment in the mining sector more attractive to both domestic and international players.
4. Support Emerging Industries: Critical minerals are integral to the growth of EVs, electronics, and strategic sectors, which are expected to expand significantly in the coming years.

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Future Outlook

The Cabinet’s decision is expected to catalyze growth in the domestic mining sector. With several blocks already auctioned and additional blocks scheduled for tender, companies have a clearer framework for planning investments, ensuring sustainable mining operations, and integrating these minerals into domestic industrial supply chains.

Moreover, the government sees a multiplier effect for other critical minerals like lithium and rare earth elements, as rationalized royalties for graphite, zirconium, rubidium, and caesium will likely increase the supply of these interconnected resources. This could strengthen India’s position in the global supply chain for strategic and industrial minerals, aligning with the country’s broader goals of technological self-reliance and sustainable industrial growth.

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Conclusion

The Union Cabinet’s approval of revised royalty rates marks a significant step in India’s strategy to promote domestic mining of critical minerals while ensuring investor confidence and supporting industrial development. By shifting to ad valorem royalties for graphite and rationalizing rates for zirconium, rubidium, and caesium, the government seeks to enhance production, reduce import dependence, and facilitate a competitive, investment-friendly mining ecosystem.

This policy initiative not only underscores the strategic importance of critical minerals for India’s industrial and technological sectors but also reflects a proactive approach to balancing economic growth, domestic resource utilization, and long-term energy and industrial security. The decision is expected to catalyze increased domestic participation in upcoming auctions, driving forward the government’s vision of a self-reliant and strategically resilient mining sector.