India’s critical minerals sector faces financing challenges
Concerted government efforts are needed to unlock investment across the supply chain.
Key Takeaways:
Volatile demand and supply, sharp swings in the prices of critical mineral inputs, long gestation periods, and high upfront capital requirements limit the flow of capital into the critical minerals sector.
While the National Critical Mineral Mission (NCMM) aims to create regulatory and institutional enablers to develop the critical minerals supply chain, focused capital expenditure is needed to accelerate large-scale mining, refining, and processing. The NCMM creates intent and incentives, but outcomes will depend on institutional execution.
For India to achieve its climate goals, the government must move beyond policy frameworks. It should focus on de-risking projects, ensuring that the critical minerals industry is commercially viable.
12 May 2026 (IEEFA South Asia and CSI): As the global energy transition accelerates, financing constraints in accessing critical minerals for India’s clean energy security remain a key challenge, finds a new briefing note by the Institute for Energy Economics and Financial Analysis (IEEFA) and Climate and Sustainability Initiative (CSI).
Meeting the rising demand for critical minerals will require significant investment across the supply chain over the next two decades. The International Energy Agency estimates that approximately USD915 billion of fresh capital investment is required globally for mining and refining over 2026–2035 under the Announced Pledges Scenario. This estimate exceeds the capital requirements for existing and announced projects, indicating potential supply gaps by 2040.
The note highlights funding shortfalls across the supply chain, from upstream exploration to capital-intensive midstream processing. It underscores the importance of private investment and targeted de-risking measures to attract capital into the sector, given that much of this investment is front-loaded with uncertain returns in the long term.
“The absence of risk-sharing capital, midstream capex support, and integration with manufacturing incentives is limiting private investment,” says Saloni Sachdeva Michael, Lead Energy Specialist, India Clean Energy Transition, at IEEFA.
The authors list high upfront costs, lengthy project timelines, and regulatory uncertainties as deterrents to investment in the sector. “Midstream bottlenecks like feedstock uncertainty, price volatility, and global overcapacity are discouraging investment in refining and processing,” says Kaira Rakheja, Energy Analyst at IEEFA.
The success of the critical minerals mission also hinges on scaling India’s green manufacturing capacity across key sectors such as batteries, electric vehicles, solar modules, and electronics, which can drive growth in the critical minerals sector.
“The high concentration of critical mineral supply chains in a few countries, primarily China, means that India needs to diversify its sources and augment its domestic manufacturing capabilities,” says Rati Verma, a Research Consultant at CSI.
The authors emphasise that a coherent strategy for building domestic processing and refining capacity is lacking. There is limited clarity on how midstream facilities will be financed, where they will be located, or how they will be integrated with mining activity. Similarly, on the processing side, India’s R&D ecosystem remains fragmented, with weak linkages between academic research, public sector units, and private industry.
While the National Critical Mineral Mission (NCMM) seeks to address upstream vulnerabilities through exploration, overseas asset acquisition, and recycling, linkages with Production Linked Incentive schemes remain weak. Moreover, while the NCMM acknowledges the importance of state participation, coordination mechanisms are not well-defined. Stronger Centre-state coordination—through clearer institutional roles, shared project pipelines, and aligned incentives—is critical to accelerating project delivery.
Alongside domestic efforts, India can strengthen access to critical minerals by securing international partnerships with resource-rich countries. As part of this strategy, Khanij Bidesh India Limited (KABIL)—a public sector joint venture—is pursuing overseas exploration and strategic acquisitions, particularly for lithium and cobalt.
Additionally, implementing Environmental, Social and Governance (ESG) practices can reduce risks associated with the critical minerals supply chain, including emissions, corruption and armed conflicts.
Critical minerals are capital-intensive, high-risk, and long-gestation assets. Without strategic government intervention, uneven progress and underinvestment could emerge as major risks. “Global experience shows that Centre-state coordination, risk-sharing, and long-term policy clarity are essential for the sector’s progress,” says Labanya Prakash Jena, Director, CSI.
Read the briefing note: Mobilising capital for India’s critical minerals sector
Media contact: Prionka Jha ([email protected]); +91 9818884854
Author contacts: Rati Verma ([email protected]); Kaira Rakheja ([email protected]); Saloni Sachdeva ([email protected]); Labanya Prakash Jena ([email protected])
About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends, and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy. (ieefa.org)
About CSI: Climate and Sustainability Initiative (CSI) is an international think tank, research and advisory institution headquartered in Singapore, working at the intersection of climate policy and climate finance, with focus on implementable solutions for developing countries in the Global South. (csiglobal.co)
