As the global clean energy transition accelerates, India continues to face major financing challenges in securing critical minerals essential for its energy security and manufacturing ambitions, according to a new briefing note released by the Institute for Energy Economics and Financial Analysis (IEEFA) and Climate and Sustainability Initiative (CSI). The report highlights that India currently imports 100 percent of key critical minerals such as lithium, cobalt, and nickel, which are vital for manufacturing batteries, electric vehicles (EVs), solar equipment, and other green technologies. As demand for clean energy technologies rises, India will require significant investments across the entire critical minerals value chain, from mining and refining to processing and manufacturing.
Massive Global Investment Needed Across Supply Chain
According to the report, the International Energy Agency estimates that nearly $915 billion in fresh capital investment will be required globally for mining and refining activities between 2026 and 2035 under its Announced Pledges Scenario. The estimate exceeds the investment pipeline for currently announced projects, signalling potential supply shortages in critical minerals by 2040.
The briefing note points to funding gaps across both upstream exploration activities and capital-intensive midstream processing operations. It emphasizes that attracting private capital will require targeted de-risking measures and stronger financial support mechanisms, especially since investments in the sector involve long gestation periods and uncertain long-term returns.
Private Investment Hindered by Structural Challenges
Saloni Sachdeva Michael, Lead Energy Specialist, India Clean Energy Transition, at IEEFA stated that limited access to risk-sharing capital and inadequate support for midstream investments are restricting private sector participation. “The absence of risk-sharing capital, midstream capex support, and integration with manufacturing incentives is limiting private investment,” she noted. Meanwhile, Kaira Rakheja, Energy Analyst at IEEFA highlighted additional operational challenges affecting investor confidence. “Midstream bottlenecks like feedstock uncertainty, price volatility, and global overcapacity are discouraging investment in refining and processing,” she said. The report further identifies high upfront costs, regulatory uncertainty, and lengthy project development timelines as major deterrents for investors.
Domestic Manufacturing Key to Sector Growth
The report emphasizes that India’s critical minerals strategy must align closely with efforts to scale domestic green manufacturing capacity. Expanding industries such as battery manufacturing, electric vehicles, solar modules, and electronics will play a crucial role in driving long-term demand and investment in the critical minerals ecosystem. According to Rati Verma, Research Consultant at CSI, the concentration of global critical mineral supply chains in a few countries — particularly China — increases strategic risks for India. “The high concentration of critical mineral supply chains in a few countries, primarily China, means that India needs to diversify its sources and augment its domestic manufacturing capabilities,” she explained.
Need for Clearer Processing and Refining Strategy
The report also points out that India currently lacks a coherent roadmap for building domestic refining and processing infrastructure.
There is limited clarity regarding:
*Financing models for midstream facilities
*Location planning for processing hubs
*Integration between mining operations and downstream manufacturing
Additionally, the report states that India’s research and development ecosystem for critical minerals remains fragmented, with limited collaboration between academic institutions, public sector companies, and private industry players.
Stronger Policy Coordination Essential
While India’s National Critical Mineral Mission (NCMM) aims to address upstream vulnerabilities through exploration, overseas acquisitions, and recycling initiatives, the report notes that coordination with Production Linked Incentive (PLI) schemes remains weak. Analysts stress that stronger centre-state coordination will be critical for accelerating project implementation. Clearer institutional roles, shared project pipelines, and aligned incentive structures could significantly improve execution efficiency.
International Partnerships and ESG Practices Gain Importance
Alongside domestic policy reforms, the report suggests that India should strengthen partnerships with resource-rich countries to improve long-term access to critical minerals. As part of the strategy, Khanij Bidesh India Limited (KABIL), a public sector joint venture, is actively pursuing overseas exploration and strategic acquisitions, particularly for lithium and cobalt assets. The report also highlights the growing importance of Environmental, Social and Governance (ESG) standards in reducing supply chain risks associated with emissions, corruption, and geopolitical instability.
Long-Term Policy Clarity Needed to Avoid Underinvestment
The analysts conclude that critical minerals projects are highly capital-intensive, high-risk, and
long-gestation in nature. Without sustained government intervention and long-term policy clarity, India could face uneven progress and continued underinvestment in the sector. Labanya Prakash Jena, Director, CSI emphasized the importance of coordinated policymaking and financial support mechanisms. “Global experience shows that Centre-state coordination, risk-sharing, and long-term policy clarity are essential for the sector’s progress,” he said.
