Why in NEWS
In May 2025, India auctioned its first potash block, a critical milestone in the government’s mission to reform the mining sector, enhance self-reliance in fertilizers, and attract private investment through transparent auctions.
Key Concepts & Terms
| Term | Description |
|---|---|
| Potash | A potassium-rich salt used primarily in fertilizers to improve crop yield. |
| Composite License (CEMP) | Single license for exploration and mining to reduce delays and attract investors. |
| District Mineral Foundation (DMF) | A fund to ensure mining revenues benefit local communities. |
| Critical Minerals | Minerals essential for renewable energy, electronics, and national security (e.g., lithium, cobalt). |
| KABIL | A joint venture to secure overseas mineral assets and reduce import dependence. |
Key Reforms Transforming India’s Mining Sector
| Reform Type | Highlights |
|---|---|
| Legal Reforms | MMDR Acts (2015, 2021) introduced auction-based licensing, removed end-use restrictions, and extended lease periods. |
| National Mineral Policy 2019 | Focus on sustainable mining, ease of doing business, tech adoption (AI, blockchain), and value addition. |
| Coal Sector Reforms | Allowed commercial coal mining, fast-tracked clearances, promoted coal gasification. |
| Technology Use | Satellite imagery, Khanan Prahari App, NGDR, drone surveys, and faceless filings. |
| Exploration Push | NMET funding, EL regime, National Critical Minerals Mission (NCMM), offshore mining. |
| Sustainability Initiatives | Star rating, mandatory mine closure plans, M-Sand promotion. |
Significance of India’s Mining Sector
| Area | Contributions |
|---|---|
| Economic Driver | Contributed 1.97% to GVA in 2023-24; Rs 4 lakh crore earned via auctions. |
| Industrial Backbone | Supports steel, aluminum, fertilizers, cement, electronics. |
| Rural Development | DMF funds used for health, education, jobs in mineral-rich districts. |
| Energy Transition | Potash & critical minerals boost fertilizer security & EV growth. |
| Strategic Global Role | Offshore mining, global tie-ups via KABIL, critical mineral diplomacy. |
Major Challenges
| Challenge Type | Details |
|---|---|
| Policy Uncertainty | Delays in clearances, frequent policy shifts, tribal land disputes. |
| Illegal Mining | Rampant in Jharkhand, Rajasthan, Goa; backed by mafia-bureaucrat nexus. |
| Low Exploration | Only 10% of potential explored; outdated technology hampers efficiency. |
| Infrastructure Gaps | Poor rail-port-road connectivity in mining belts increases cost. |
| Import Dependence | 100% import of lithium, cobalt; Chinese export controls raise concerns. |
| Environmental & Social Issues | Tribal protests, poor mine safety, ineffective DMF implementation. |
Way Forward: Strengthening the Mining Sector
| Strategy | Recommendations |
|---|---|
| Boost Exploration | Incentivize private sector via tax breaks, improve GSI & NMET funding. |
| Logistics Upgrade | Develop mineral corridors, boost ports (Paradip, Vizag), mine-to-market links. |
| Tech Integration | AI, remote drilling, national mineral database, clean mining innovations. |
| Sustainable Mining | Enforce ESG, bio-reclamation, ensure mine closure & effective DMF use. |
| Crackdown on Illegal Mining | Expand Mining Surveillance System, protect whistleblowers, penalize offenders. |
| Critical Minerals Focus | Build refining units, secure global assets, roll out Critical Minerals Policy. |
In a Nutshell (Mnemonic: “SMART CORE”)
Sustainable reforms
Mining tech adoption
Auction-based licenses
Resource security via critical minerals
Transparency in governance
Community development (DMF)
Offshore exploration
Robust infrastructure
Energy & fertilizer self-reliance
Prelims Practice Questions
- Which mineral was auctioned for the first time in India in May 2025?
a) Lithium
b) Bauxite
c) Potash
d) Graphite - Which policy aims to promote private sector participation and tech use in Indian mining?
a) National Mineral Policy 2019
b) National Manufacturing Policy
c) National Logistics Policy
d) National Critical Minerals Policy - What is the role of the District Mineral Foundation (DMF)?
a) Promotes mineral exports
b) Provides training to miners
c) Funds development of mining-affected areas
d) Manages auction of critical minerals
Mains Practice Questions
- “Reforms in India’s mining sector can drive economic growth, but sustainability and inclusiveness must remain central.” Analyze. (GS 3 – Economy & Environment)
- Critically evaluate India’s preparedness in securing critical mineral supply chains for its energy transition and tech goals. (GS 3 – Infrastructure and Science)
Prelims Answer Key with Explanation
| Ques | Answer | Explanation |
|---|---|---|
| 1 | c | India auctioned its first potash block in May 2025. |
| 2 | a | The National Mineral Policy 2019 promotes private participation & technology. |
| 3 | c | DMF ensures local area development using mining revenues. |
