India is embarking on a significant initiative to enhance its production of critical minerals by rationalizing royalty rates for essential resources such as graphite, caesium, rubidium, and zirconium. This strategy, approved by the Union Cabinet, is designed to minimize the country's dependency on imports and fortify local supply chains, especially in light of increasing export restrictions imposed by China, which currently dominates the global critical minerals market.

Under the new plan, India aims to facilitate the auction of mineral blocks that contain caesium, rubidium, and zirconium. This initiative not only targets the enhancement of known mineral resources but also seeks to uncover associated critical minerals such as lithium, tungsten, and niobium, among others. These minerals are vital for advancing green energy requirements and for various technological applications.

The Union Cabinet, led by Prime Minister Narendra Modi, has proposed a shift in the royalty calculation method from a per-tonne basis to an ad valorem basis for graphite, adjusting the rates to better reflect market values. Specifically, for graphite mineral grades that contain 80% or more carbon, the royalty will be set at 2% of the Average Sale Price (ASP), while for lower-grade graphite, the rate will be 4% of ASP. The royalty for zirconium will be fixed at 1% of ASP, with both caesium and rubidium set at 2% of ASP.

This approach not only seeks to unlock mineral resources but is also aligned with the Second Schedule amendments of the Mines and Minerals (Development and Regulation) Act. The application of ad valorem royalty rates will enable a more accurate reflection of price differences across various graphite grades. Enhancing the domestic production of these critical minerals is expected to lead to job creation and an overall reduction in import dependencies.

Critical minerals such as graphite and zirconium have been designated as essential for both national and global industries, underlining their importance in the realms of energy transformation and advanced technological applications. For instance, graphite functions as a critical anode material in electric vehicle (EV) batteries, providing essential conductivity and charge storage capabilities. Currently, India imports approximately 60% of its graphite needs, underscoring the urgency of boosting local production.

Zirconium’s unique properties make it suitable for use in diverse fields including nuclear energy, aerospace, healthcare, and manufacturing, while caesium’s applications reach into advanced electronics and precision instruments. Meanwhile, rubidium plays a key role in producing specialized glass for fibre optics and telecommunication networks.

The government's announcement of the Sixth Tranche auction for critical mineral blocks on September 16, 2025, will include five graphite blocks, two rubidium blocks, and separate blocks for caesium and zirconium. The approval of the new royalty framework now enables bidders to make more competitive financial bids during the auction, driving up potential revenue from these critical minerals while enhancing India's position in this vital sector.