India's Mineral Sector Faces Hurdles Despite US$5 Trillion Economy Ambitions
India's minerals and mining sector faces challenges despite its crucial role in achieving a US$5 trillion economy. While only 10% of the country's area has been explored for minerals, the industry's contribution to GDP has declined. Exploration has slowed due to inadequate incentives and limited technology and skills.
The current policy hinders private companies, which can only explore through a Non-Exclusive Reconnaissance Permit (NERP) and do not receive preferential mining lease allotment. The NERP holder receives royalties, but returns are protracted and inadequate. To boost exploration, India must invest in advanced training programs, foster public-private partnerships, enhance R&D in deep drilling technologies, and create supportive policies. This includes allowing a seamless transition from exploration to mit and permitting license sales at any stage. Adequate financing is also crucial, and India should adopt international practices to boost exploration.
The mineral industry's contribution to GDP has dropped from 3% in 2011-12 to 2.2% in 2018-19. The trade deficit due to minerals reached Rs 1.3 trillion in 2016-17. Governments in key mining geographies offer a seamless licensing regime, enabling the emergence of 'junior explorers'. India must learn from these models to attract skilled professionals and improve technology availability.
To harness its mineral potential, India must address these challenges and create a supportive ecosystem. This includes improving exploration incentives, enhancing technology and skills, and fostering public-private partnerships. By doing so, India can increase its mineral output, reduce its trade deficit, and contribute more significantly to its economic growth targets.
