Explained: India’s Royalty Reforms for Critical Mineral Exploration

In India
November 14, 2025
Satish Bhasin
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The Union Cabinet has approved a new royalty system for critical minerals that shifts India toward a more transparent, market-linked framework. Since these minerals often occur with rare earth elements, the reforms will also boost India’s rare-earth discovery potential. This ABC Live report explains how the royalty shift enhances investment, reduces risk and supports India’s long-term mineral security.

New Delhi (ABC Live): Global demand for critical minerals is rising quickly as countries adopt clean-energy systems, modern electronics and defence technologies. At the same time, competition for these minerals has intensified, making secure access more important than ever. As a result, Graphite, Caesium, Rubidium and Zirconium have become essential inputs for batteries, aerospace parts, fibre-optic systems and nuclear energy. Because of this, nations are now re-shaping their mineral policies to reduce long-term risks.

India faces similar challenges. Although the country holds nearly 6.9 million tonnes of rare-earth-oxide reserves, supply gaps still remain. Consequently, heavy import dependence continues to expose India to external shocks and market disruptions. Against this backdrop, the Union Cabinet’s decision on 12 November 2025 to revise royalty rates marks a timely and strategic step toward stronger mineral security.

Furthermore, the new royalty system aligns closely with the National Critical Mineral Mission (NCMM). Since this Mission aims to expand exploration and reduce supply risks, predictable royalty rules are essential. Therefore, the updated framework improves planning certainty, strengthens investor confidence and supports deeper exploration across India’s mineral belts.

What the Cabinet Approved

Revised Royalty Rates

Caesium: 2% of ASP (metal content)
Graphite ≥80% carbon: 2% of ASP
Graphite <80% carbon: 4% of ASP
Rubidium: 2% of ASP (metal content)
Zirconium: 1% of ASP (metal content)

Why This Shift Matters

Ad valorem royalty links payment to sale price rather than weight. Earlier, Graphite paid a fixed per-tonne royalty, which ignored grade and value differences. Under the new system, royalty reflects true mineral worth. In addition, the change improves transparency, ensures fairness and brings India in line with global norms for critical minerals.

How These Reforms Strengthen India’s Mineral Strategy

Supporting the National Critical Mineral Mission (NCMM)

The NCMM aims to strengthen India’s position in global mineral supply chains. Because exploration requires long-term visibility, predictable rules are essential. With the updated royalty framework, India can pursue key NCMM goals such as:

1,200 exploration projects
26 overseas mines led by PSUs
24 overseas assets pursued by private firms
400,000 tonnes of minerals sourced through recycling
6,000 tonnes of rare-earth magnets manufactured annually

In addition, the revised system encourages deeper drilling and modern surveys, making new discoveries more likely. As a result, India can reduce strategic risks and unlock fresh mineral corridors.

Attracting More Bidders and Enhancing Auction Outcomes

India released several blocks in the Sixth Tranche of Critical Mineral Auctions (Sept 2025). However, many investors hesitated due to unclear royalty rules. Now that ASP-linked royalty is in place, companies can better assess costs and risks. Consequently, future auctions are expected to attract stronger bids, higher premiums and faster project development.

Moreover, the clearer rules make India a more predictable and appealing destination for global mining companies. Therefore, foreign participation may also increase.

Boosting Rare-Earth Exploration Through Geological Co-Occurrence

Many critical minerals occur in zones that also contain rare earth elements (REEs). Because of this, exploration for one mineral often leads to discoveries of another. Examples include:

Caesium–Rubidium pegmatites that contain REE minerals
Zircon-rich coastal sands that include monazite and xenotime
Graphite belts that overlap with REE-bearing metamorphic zones

By encouraging wider exploration, the royalty reforms increase the chances of identifying new REE sources. Therefore, India can strengthen its rare-earth supply chain, which is essential for EV motors, wind turbines, telecom systems and defence technologies.

Reducing India’s Heavy Import Dependence

Graphite: A Key Weak Point

Graphite is vital for lithium-ion batteries. Yet, India imports most of its needs. In 2023:

Artificial graphite imports: 62.77 million kg (US$70.56M)
Natural graphite imports: US$34M

Even though India has several Graphite blocks under exploration, demand continues to grow faster than supply. Thus, clear royalty rules will help scale production and support India’s EV and energy-storage ecosystems.

Zirconium, Caesium and Rubidium: Limited Global Sources

Only a handful of countries supply these minerals. Since they power nuclear reactors, telecom networks, timing equipment and night-vision devices, disruptions can affect national security. With the updated royalty system, India can diversify its sources and reduce geopolitical risks.

Aligning With Global Best Practices

Most mineral-rich countries use ad valorem royalty in the 2–4% range. Because India’s revised rates fall within this band, the mining ecosystem becomes more competitive and transparent. It also reduces valuation disputes and improves investor trust. As a result, long-term exploration funding becomes easier to secure.

Strengthening Clean-Energy, Technology and Defence Sectors

Each of the revised minerals supports essential industries:

Graphite → EV batteries, hydrogen storage
Zirconium → nuclear reactors, aerospace alloys
Rubidium → fibre optics, telecom networks
Caesium → atomic clocks, GPS, quantum devices

Since secure raw material access is critical for these sectors, royalty reform strengthens India’s supply chain. In turn, this supports EV manufacturing, renewable energy, aerospace, semiconductors and defence production.

Advancing India’s Rare-Earth Goals

India aims to build a complete rare-earth value chain. Because REEs are often found near Caesium, Rubidium, Zirconium and Graphite, the royalty reform indirectly supports this mission. The key targets include:

tapping 6.9 million tonnes of REE reserves
expanding exploration in REE-rich belts
building domestic REE-processing facilities
producing 6,000 tonnes of rare-earth magnets annually

With clearer royalty rules, exploration teams are more likely to identify REE deposits during routine surveys. Thus, India moves closer to long-term rare-earth independence.

Helping States Grow Through Jobs and Revenue

Expanding exploration brings direct benefits to states. They gain employment, higher royalty income, new local industries and improved district infrastructure. Consequently, the revised royalty policy supports both national priorities and state-level economic growth.