Incentivising Non-Fuel Mineral Exploration in India

India has a vast mineral geological potential with a similar geological history to the mining-rich regions of Western Australia and Eastern Africa, and a large portion of it lies under some of the least-developed and densely-populated districts of the country. The operationalisation of mines in these areas can act as a catalyst for growth, creating much-needed jobs, increasing revenues to the states’ exchequers, and providing for the mineral security of the nation. However, despite possessing known resources of some minerals such as potash and molybdenum, India remains import dependent for many minerals, which affects the trade balance and increases the country’s supply risks. This is particularly pronounced in the case of critical minerals required to manufacture green technologies such as wind turbines, solar panels, batteries, and electric vehicles (Chadha, Sivamani, & Bansal, 2023).

The mining sector faces several challenges that impede its sustainable growth. These include environmental concerns, community welfare, outdated equipment and technologies, poor worker safety, unskilled human capital, and inadequate infrastructure. Another crucial obstacle in India is the lack of adequate mineral exploration. Exploration is the first step in the lifecycle of a mine, where various techniques (such as aerial surveys, geological mapping, and geochemical analyses) are employed to determine the shape, size, grade, and distribution of a mineral resource. Each stage of exploration (reconnaissance, prospecting, and detailed exploration) improves the knowledge of the minerals: starting with the estimation of geological potential, resources, and reserves (i.e., economically mineable resources), and finally, production. However, it is estimated that only 10% of India’s obvious geological potential (OGP) has been explored, and less than 1% of the global exploration budget is spent in India (Ministry of Mines, 2023b). India’s mining potential remains underutilised (Bhandari & Kale, 2020). As a result, many minerals remain at the resources level, with further exploration required to take them to the reserves stage.

This Discussion Note provides an overview of India’s historical, current, and proposed exploration policies, good international practices, issues with the existing system, and recommendations for creating a globally-competitive exploration regime.