India's Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, marks a significant milestone for the country's mining and electric vehicle (EV) sectors, promising to invigorate its economic ambitions and sustainability efforts. The government has undertaken comprehensive reforms aimed at enhancing domestic production of key minerals, facilitating electric vehicle manufacturing, and nurturing the green economy.
Sitharaman emphasized the government's focus on transforming the mining sector, announcing plans to recover minerals from mining by-products. This includes the removal of customs duties on 12 major minerals, such as cobalt powder, lithium-ion battery scrap, lead, and zinc, which are pivotal for industries like renewable energy and EV production. “This initiative will drive long-term growth and sustainability in the sector,” noted Rakesh Surana, Partner at Deloitte India.
The budget allocates Rs 410 crore for the National Critical Mineral Mission, underscoring the government’s commitment to boost the production and recycling of these resources. The removal of import duties is expected to significantly impact micro, small, and medium enterprises (MSMEs), allowing them to source necessary materials at reduced costs. Shobhit Srivastava, programme manager at the Centre for Science and Environment (CSE), highlighted, “The new Budget’s focus on key minerals aims to bolster MSMEs, stimulate domestic manufacturing and strengthen India’s circular economy.”
Additions to the budget also included provisions for the establishment of the State Mining Index, intended to improve governance and healthy competition among states in mining operations. According to Sitharaman, this index aims to encourage states to adopt best practices and to measure their performance transparently. Arun Misra, CEO of Hindustan Zinc Ltd., emphasized the significance of these measures, stating, “Critical minerals are pivotal for India’s transition to a low-carbon economy.”
The drive for sustainable practices isn’t merely about resource extraction; it includes innovative initiatives to recover minerals from mining waste, ensuring the preservation of environmental integrity. Mining firms to be involved have welcomed this strategy as it aligns with global sustainability goals. The government’s effort to encourage recycling and reusing resources corresponds with the increasing global emphasis on creating circular economies within industries.
Describing mining as one of the six domains for transformational reforms, Vedanta Chairman Anil Agarwal expressed optimism about the economic benefits. He stated, “Mining can increase domestic production, reduce imports, and create numerous jobs.” This perspective reflects broader expectations of job creation within the sectors supported by such reforms.
To this end, the government plans to significantly improve supply chain resilience for the manufacturing sector through the integration of domestic mineral production. These reforms coincide with the national objectives set forth under the Aatmanirbhar Bharat initiative, which seeks to reduce dependency on imports and fortify India's industrial capabilities.
Budget allocations for battery-related initiatives have also seen increased funding. The production-linked incentive (PLI) scheme, aimed at advanced chemistry cell battery storage, was enhanced from Rs 15.42 crore to Rs 155.76 crore. The finance minister mentioned how the exemption from import duties on lithium-ion battery scrap would promote battery recycling. “This could reduce the costs of production of batteries and aid in establishing a circular economy for the industry,” noted Moushumi Mohanty, senior programme manager at CSE.
Nevertheless, there are hurdles to overcome. Mohanty pointed out the necessity of developing infrastructure for battery recycling and the challenges posed by regulations outside India, particularly by the European Union, which may limit access to scrap resources. She stressed, “It is imperative to build lithium-ion recycling infrastructure to leverage the policy changes.”
The budget did not allocate funding for certain previous initiatives like the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, indicating a strategic pivot to focus on broader manufacturing capabilities over targeted subsidies. The Prime Minister Electric Drive Revolution in Innovative Vehicle Enhancement (PME-DRIVE) scheme saw its budget boosted significantly, from Rs 1,870.76 crore to Rs 4,000 crore.
Overall, these budgetary reforms signal India’s commitment to fostering green technologies and advancing sustainable mining practices, integrating them with strategic policy frameworks intended to revitalize the economy and lead the nation toward self-reliance. Together, these efforts could position India favorably within the global minerals market and support its quest for energy independence and economic prosperity.