India’s Mineral Imports

Context

India’s mineral import landscape has undergone a significant transformation over the past five years, with total imports soaring by 80% to reach ₹68,633 crore. This surge reflects the growing demand for various minerals essential for industrial growth, technological advancements, and infrastructure development. As the country strives for self-reliance in critical minerals, understanding the factors driving this increase is crucial for policymakers, industry stakeholders, and the economy at large.

Critical mineral imports rise as shift towards green energy catches pace |  News - Business Standard

Overview of Mineral Imports

Current Statistics: In the fiscal year 2022-23, India’s mineral imports were valued at ₹68,633 crore, marking a substantial increase from previous years. This rise can be attributed to several factors, including increased industrial activity, infrastructure projects, and the transition towards renewable energy sources.

Key Minerals Imported

India’s mineral imports encompass a wide range of materials, including:

  • Copper: With a reliance of approximately 93% on imports, copper is vital for electrical wiring, plumbing, and telecommunications.
  • Lithium and Nickel: India imports 100% of its lithium and nickel requirements, which are critical for battery production in electric vehicles and renewable energy storage.
  • Coal: Despite having significant domestic reserves, India imported 215 million tonnes of coal valued at ₹11,605 crore in 2020-21, highlighting the gap between demand and local production.
  • Diamonds: India is a leading importer of uncut diamonds, primarily for cutting and polishing, with imports valued at ₹12,835 crore in 2020-21.

Factors Driving Increased Mineral Imports

  • Industrial Growth and Urbanization: India’s rapid industrialization and urbanization have led to an unprecedented demand for minerals. The construction and manufacturing sectors are expanding, driving the need for raw materials such as steel, copper, and cement.
  • Transition to Renewable Energy: The Indian government has set ambitious targets for renewable energy, aiming to achieve 50% of its cumulative installed power capacity from non-fossil sources by 2030. This transition requires substantial quantities of critical minerals like lithium, cobalt, and nickel for battery production and renewable energy technologies.
  • Global Supply Chain Vulnerabilities: The COVID-19 pandemic exposed vulnerabilities in global supply chains, prompting India to diversify its sources of mineral imports. This shift aims to reduce dependency on a few countries, particularly China, which has dominated the supply of various minerals.

Economic Implications

  • Impact on Trade Balance: The surge in mineral imports has implications for India’s trade balance. While increased imports can stimulate economic growth, they also contribute to a widening trade deficit. Policymakers must balance the need for mineral imports with strategies to enhance domestic production.
  • Job Creation and Economic Development: The mining sector plays a crucial role in job creation and economic development. As mineral imports rise, there is an opportunity for the government to invest in domestic mining initiatives, thereby creating jobs and boosting local economies.
  • Investment in Mining Infrastructure: To support the growing demand for minerals, India must invest in mining infrastructure. This includes enhancing exploration activities, developing processing facilities, and improving transportation networks to facilitate the efficient movement of minerals.

Government Initiatives

  • Policy Reforms: In response to the rising demand for minerals, the Indian government has implemented several policy reforms aimed at boosting domestic production. Key initiatives include:
    • Mines and Minerals (Development and Regulation) Amendment Act, 2023: This act aims to streamline the mining process and encourage private sector participation in mineral exploration and production.
    • Khanij Bidesh India Ltd. (KABIL): This initiative focuses on acquiring overseas mineral assets to secure a steady supply of critical minerals, including lithium and cobalt.
  • International Collaborations: India has actively sought international partnerships to enhance its mineral supply chain. The formation of the US-led Minerals Security Partnership (MSP) is a significant step towards diversifying import sources and reducing dependency on single countries.
  • Exploration and Research: The Geological Survey of India (GSI) has ramped up exploration activities for critical minerals. Recent efforts have identified significant lithium reserves in Jammu and Kashmir, which could bolster domestic production and reduce reliance on imports.

Future Outlook

  • Increasing Demand for Critical Minerals: As India accelerates its transition to a green economy, the demand for critical minerals is expected to rise further. Policymakers must prioritize the development of domestic resources while continuing to engage in international partnerships to secure a stable supply.
  • Focus on Sustainable Practices: The future of mineral imports will depend on the industry’s ability to adopt sustainable practices. Emphasizing responsible mining and environmental stewardship will be crucial for maintaining social license and ensuring long-term viability.
  • Enhancing Domestic Production: To reduce import dependency, India must invest in enhancing domestic mineral production capabilities. This includes exploring new mineral deposits, improving extraction technologies, and fostering a skilled workforce in the mining sector.

Conclusion

India’s mineral import surge, reaching ₹68,633 crore, highlights the country’s growing reliance on external sources for essential minerals. As industrialization, urbanization, and the transition to renewable energy accelerate, the demand for minerals will continue to rise. The government’s proactive measures, including policy reforms and international collaborations, are essential for securing a stable supply of critical minerals while promoting sustainable practices. Balancing import needs with domestic production capabilities will be crucial for India’s economic growth and development in the coming years.

Source: The hindu

UPSC Mains Practice Question

Q. Discuss the factors contributing to the 80% increase in India’s mineral imports over the past five years. What are the implications of this trend for India’s economy and its mineral resource management?

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