India’s Mineral Production Faces Challenges: SBI Research Report
New Delhi, India – A recent report by SBI Research highlights a concerning trend in India’s mineral production over the past five years. Major minerals have shown either single-digit growth or a decline in output from FY19 to FY24. To fully utilize its mineral resources, India needs a coordinated approach to address challenges across the value chain.
Key Challenges and Solutions
India must overcome bureaucratic hurdles, improve regulatory frameworks, and invest in infrastructure to support the mining sector’s growth. Rare earth metals and other critical minerals are essential for modern technologies like electronics, renewable energy systems, and advanced manufacturing. Despite India’s vast mineral resources, the mining sector has not reached its full potential.
Comprehensive Mineral Strategy
India needs a comprehensive mineral strategy that spans the entire value chain:
- Advanced Geoscience Techniques: Using satellite imagery, geospatial data, and remote sensing technologies to identify new mineral deposits.
- Efficient Extraction Methods: Implementing best practices from leading mining countries and investing in state-of-the-art extraction technologies.
- Robust Processing Facilities: Upgrading raw minerals to intermediate forms for use in various manufacturing processes.
- Advanced Manufacturing Capabilities: Producing high-value products like batteries, magnets, and electronic components domestically.
- Promoting a Circular Economy: Recycling end-of-life products to recover valuable minerals, conserving resources, and minimizing environmental impact.
Job Creation and Economic Impact
The mining sector is labor-intensive and has high potential for job creation. In FY19, around 480,000 individuals were employed daily in the sector, with 78% of these jobs in the public sector. Currently, it is estimated that 580,000 to 600,000 people are employed daily in mining activities. A 10% increase in mineral production could generate an additional 50,000 to 70,000 daily jobs.
Enhancing Competitiveness
Improving the mineral value chain will enhance India’s competitiveness in the global market. This includes fostering innovation through research and development, improving infrastructure, and creating a supportive ecosystem for startups and small businesses in the mining and manufacturing sectors.
Fiscal Reforms
To support the mineral strategy, India must pursue comprehensive fiscal reforms. Aligning personal income tax with corporate tax rates and transitioning all taxpayers to the new tax regime is crucial. The government is also considering reforms to the Goods and Services Tax (GST) system, including expanding the GST ambit to cover more items like electricity and aviation turbine fuel (ATF).
Conclusion
India’s mineral wealth includes 95 different minerals, ranging from metallic and non-metallic to fuel and atomic minerals. Despite this abundance, the growth rate in mineral production has been modest. With a growing demand for rare earth metals and other crucial minerals, India must revamp its mineral strategy to ensure sustainable economic growth, job creation, and global competitiveness.
