Context:
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The Union Cabinet of India has approved revised royalty rates for key critical minerals — graphite, caesium, rubidium, and zirconium.
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The decision aims to encourage domestic mining, improve the attractiveness of mineral auctions, and reduce India’s import dependence in strategically important sectors.
Key Highlights:
Approved Royalty Structure
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Graphite:
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Shifted from per-tonne royalty to ad valorem (value-based) royalty.
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4% royalty for graphite with <80% carbon content.
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2% royalty for graphite with ≥80% carbon content.
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Caesium & Rubidium:
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2% royalty on the average sale price.
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Zirconium:
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1% royalty on the average sale price.
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Rationale for Revision
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Earlier royalty structures were:
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Misaligned with market value of minerals.
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Considered unattractive for bidders, especially for niche and high-value minerals.
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Ad valorem pricing ensures:
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Better price discovery
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Fairer sharing of mineral value between state and miners
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Impact on Mineral Auctions
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Rationalised rates are expected to:
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Improve participation in mineral block auctions
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Enable exploration and extraction of previously underutilised deposits
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Particularly important for:
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Caesium, rubidium, and zirconium, where auctions had limited traction.
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Strategic & Economic Significance
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These minerals are critical inputs for:
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Electronics and semiconductors
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Renewable energy technologies
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Aerospace and defence
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Domestic availability strengthens:
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Supply chain resilience
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Strategic autonomy
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Atmanirbhar Bharat objectives
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Broader Policy Context
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Part of India’s larger push towards:
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Critical Minerals Mission
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Reducing vulnerability to global supply disruptions
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Supports downstream industries by:
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Lowering input uncertainty
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Encouraging long-term investment in mining and processing
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Key Concepts Involved:
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Royalty Rate: Payment made to the government for mineral extraction rights.
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Ad Valorem: Levy calculated as a percentage of the mineral’s value, not quantity.
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Critical Minerals: Minerals vital for modern technologies with high import dependence and supply risk.
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Mineral Auction: Competitive allocation of mining rights to ensure transparency and efficiency.
UPSC Relevance (GS-wise):
GS 3 – Economy
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Mining sector reforms
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Resource pricing and fiscal policy
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Reducing import dependence in strategic sectors
Prelims Focus:
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Difference between ad valorem and specific (per-tonne) royalty
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Strategic uses of graphite, caesium, rubidium, zirconium
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Role of the Union Cabinet in mineral policy decisions
Mains Enrichment:
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Discuss how rationalised royalty regimes can balance revenue generation with investment promotion.
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Examine the role of critical minerals in India’s energy transition and industrial competitiveness.