Green and clean: on India and a critical minerals framework  

India has come a long way in its attempt to transition to cleaner forms of power in the past decade. This is partly reflected in the budgetary allocation to the Ministry of New and Renewable Energy between fiscal years 2015 (BE ₹1,535 crore) and 2025 (BE ₹32,626 crore). But these allocations, other than in 2015 and 2023, have been underutilised, leading to lower revised estimates (REs). However, this does not fully reflect the clean energy journey. India attempted a major leap with the PM-KUSUM scheme in 2019, a year ahead of the COVID-19 disruptions, with an outlay of ₹34,422 crore. The scheme envisaged having off-grid solar irrigation pumps and grid-connected solar plants on fallow farmlands. While PM-KUSUM has received a tepid response, with less than half a gigawatt of installed capacity, the realisation that energy transition is both a desirable outcome and a requirement occurred during the COVID-19 years, when there were major supply chain disruptions to coal, oil and gas. This led to India pledging to produce half its energy requirements from renewables in about five years from now, at COP26 in 2021.

It was the 2021 Budget that heralded the clean energy shift, with ₹18,100 crore for a PLI scheme for advanced chemistry cell manufacturing to augment India’s grid-scale battery storage capacity. A ₹4,500 crore PLI scheme for solar photovoltaic modules went up to ₹19,500 crore in 2022. But the government also decided to levy a 40% basic customs duty (BCD) on solar modules and 25% on solar cells to reduce the overwhelming import dependence on China. However, this slowed solar power installations nationwide with prices rising. And even while renewables constitute 46% of India’s total installed capacity (October 2024), 70% of its power output is from coal. Experts have pointed to the need for grid-scale battery storage technology to augment India’s renewables output, as intermittent RE production leads to the continued reliance on fossil-fuel based power. With the realisation that steep BCDs could be inflationary and counterproductive to localising production, particularly in the capital-intensive lithium-ion battery technology sector, the government has announced that it will exempt 12 critical minerals and 35 capital goods from BCDs. But reducing dependence on China for energy transition resources and technology would also require India showing leadership in formulating a critical minerals framework, that is socially and environmentally just during extraction, and equitable in its distribution. With the U.S. withdrawing its leadership position in these areas, India must aim to play a bigger role.