India needs to establish technology transfer agreements with countries attempting to diversify their supply chains, thereby securing critical mineral supplies for transition to green-tech, including electric vehicles and energy storage solutions, says the Economic Survey 2024-25.

It notes that India could explore partnerships with other aspiring nations to “help distribute the high costs of securing a comparative advantage in the global market”.

“India must aim to establish technology transfer agreements with other nations that are also seeking to diversify their supply chains,” it said.

Earlier this week, India had announced setting up a ₹16,300 crore National Critical Minerals Mission, with another ₹18,000 crore from PSUs, making it one of the largest mineral security programmes ever announced.

Critical minerals mining

China continues to be a dominant player in processing of these critical minerals, that include the likes of lithium, vanadium, molybdenum, platinum group of elements, rare earth elements, among others.

Across key commodities such as nickel, cobalt, and lithium, China alone is responsible for processing 65 per cent, 68 per cent and 60 per cent of the global output, respectively, the Survey noted.

Similarly, in the case of Rare Earth Minerals, China contributes to 63 per cent of global mining and 90 per cent of global processing output.

According to V Anantha Nageswaran, CEA, there continues to be “clear dominance of one country” and even if the country does not mine these minerals itself, “processing happens in (this) one country”.

India has so far identified 24-odd minerals as critical and of strategic importance.

The Survey said lithium-ion batteries will dominate other technologies for quite some time, and their demand is expected to grow at a CAGR of 23 per cent by 2030. “The lack of viable alternative battery technologies reinforces China’s dominant position in lithium-ion batteries.”

Govt boost

The Survey added that the country’s pursuit towards “decarbonis(ing) road transportation has been accompanied the promotion of domestic manufacturing facilitated by schemes such as FAME India, the Production Linked Incentive (PLI) Scheme for Auto Components, and the Scheme for Promotion of Manufacturing of Electric Passenger Cars in India, among others.”

It adds that as the demand for EVs is expected to grow, dependence on imported components such as DC motors, e-motor magnets, and other electrical parts will likely rise. Leading EV manufacturers have noted an increasing proportion of Chinese imports (in their total material expenditure), indicating significant dependence on China for certain resources and technical know-how.

India has taken policy interventions such as the PLI Scheme for Advanced Chemistry Cell Manufacturing, while ramping up of Khanji Bidesh India Limited (KABIL) have been undertaken “to deal with such risks”.

“Going forward, policies for electric vehicles must focus on de-risking supply chains by promoting a more self-reliant ecosystem powered by increased R&D in advanced battery tech such as Sodium-ion and Solid-State Batteries,” it said. Suggestions include securing intellectual property in the domain.

“In the interim, PLI Schemes can also reward the making of EV cells (lithium-ion cells), as most manufacturing and value addition happens up to the cell-making stage,” the Survey said.