New budget draft proposes, among other measures, the removal of import duties on equipment used to process critical minerals such as rare earths.
India, now the world’s most populous country and one of its fastest-growing economies, is facing rapidly rising demand for critical minerals, driven by the expansion of renewable energy and the domestic high-tech industry. To reduce its heavy reliance on imports, particularly from China, the government aims to make greater use of domestic resource deposits alongside forging new trade partnerships. Several new measures supporting this strategy were unveiled on Sunday as part of the draft budget for 2026 and 2027 (PDF).
Under the proposal, basic import duties on equipment used to process critical minerals such as rare earth elements would be abolished, an industrial segment long dominated by China. In addition, the government plans to support resource-rich states in establishing dedicated industrial clusters that combine mining, processing, research, and industrial manufacturing of rare earths.
Import Duties on Monazite Sand to Be Eliminated
The draft budget also includes a full exemption from import duties on monazite sand, a key raw material for the extraction of rare earth elements. India itself holds substantial deposits of these sands, but they have so far been exploited only to a limited extent on a commercial scale.
Fiscal measures are also part of the package. Sellers of certain domestically traded goods—including scrap and minerals—would be subject to lower taxes. Companies would also receive tax incentives for the exploration of specific critical raw materials, aimed at identifying and developing new deposits.
These proposals build on earlier initiatives to strengthen India’s resource independence. In November, the cabinet approved a plan to subsidize the development of a domestic rare-earth magnet industry. These high-tech components are essential for a wide range of civilian and military applications. More than a year ago, the government announced the removal of tariffs on waste and scrap to ensure their availability for domestic production. In the summer of 2024, import duties on 25 critical minerals, including lithium and rare earth elements, were also eliminated.
Photo: Indah Lestari, BRGFX via Canva; montage rawmaterials.net