India’s mining sector is gearing up for accelerated expansion and gaining higher strategic importance in the economy with a contribution of approximately 2 per cent to the country’s gross domestic product (GDP). The strong market position is evident as India stands as the second largest coal and aluminium producer, third in chromite and zinc production, and fourth in iron ore and bauxite production in the world. It has also witnessed around 8 per cent growth in coal production in 2024 as compared to 2023. This growth is driven by a few outlying trends in the sector such as the uptake of proactive regulatory measures, increased exploration of critical and strategic minerals and rise in technological and sustainable innovations. This is enabling more efficient, responsible and advanced mining operations. Further boosting critical mineral exploration, beneficiation and processing, the central government approved the National Critical Mineral Mission in January 2025, with an allocation of Rs 163 billion. Additionally, public sector enterprises and private companies are expected to invest
Rs 180 billion to support and advance this mission. Besides, technologies such as internet of things (IoT), artificial intelligence (AI), and machine learning (ML). in addition to decarbonisation and integration of clean energy by private players are also instrumental in the holistic growth of the sector.
Reformation of policies and extending regulatory support
The mining sector is observing a change in the policy landscape to enhance transparency, boost efficiency and promote offshore mineral exploration activities. The government has actively amended existing laws to facilitate both domestic and foreign investments to drive sectoral growth. Stirring such regulatory reforms, the auction-based mineral allocation system was mandated under the Mines and Minerals (Development and Regulation) Amendment Act, 2015. It has significantly increased transparency in mineral block allocation since then. As of December 2024, 113 coal mines have been successfully auctioned under commercial mining, with a peak rated capacity of 257.6 million tonnes per annum. These mines, once fully operational, are expected to attract investments of over Rs 386 billion. To further advance the auction process, the Ministry of Coal launched the 11th round of coal mine auctions in December 2024, making 27 additional coal blocks available for commercial mining.
In a move to enhance offshore mineral exploration and decrease reliance on imports, the government amended the Offshore Areas Mineral (Development and Regulation) Act, 2002, in August 2023. This legislation paves the way for greater private sector involvement in offshore mining, with a particular focus on polymetallic nodules, rare earth elements (REE) and lithium. In line with this, in November 2024, the first-ever e-auction of mineral blocks in offshore areas was launched. It aims to enhance the opportunities for extensive mineral resources within the exclusive economic zone. It features 13 blocks spread across the
Arabian Sea and the Andaman Sea that offer construction sand, lime mud and polymetallic nodules.
Higher traction for critical minerals
There is a growing emphasis on critical minerals in India to ramp up the efforts of promoting the use of clean energy. These minerals, vital for electric vehicles, renewable energy storage and advanced electronics, are being actively auctioned for exploration by the Ministry of Mines. As of December 2024, the ministry has issued a notice inviting tenders for 48 critical mineral blocks in four tranches. Of these, 24 blocks have been successfully auctioned and bidders have been declared. Moreover, on March 13, 2025, it has also launched the first auction of exploration licenses for 13 blocks for critical minerals.
In a similar stride, the Geological Survey of India has undertaken 438 exploration projects in field season 2024-25, including 195 critical mineral projects. This was a significant increase from 127 critical mineral-based exploration projects of the previous field season, 2023-24.
Additionally, multilateral collaborations are also gaining momentum in this direction. For instance, the key public sector enterprise in the sector, Coal India Limited (CIL), is diversifying into critical minerals with a focus on lithium brine assets. It has advanced towards exploring opportunities in major countries such as Argentina, Australia and Chile that are abundant in lithium. It has invited expressions of interest from experienced consultants for carrying out technical due diligence on lithium brine assets in Argentina. In addition, in January 2025, CIL has also signed a non-binding MoU with IREL (India) Limited (formerly Indian Rare Earths Limited) to collaborate on developing these minerals.
Push to technological advancements
The sector is also actively integrating advanced technologies to streamline operations, increase output and strengthen workplace safety, reflecting a push towards modernisation. IoT, AI/ML and robotics are being adopted to enable predictive maintenance, real-time asset monitoring and data-driven decision-making. The use of drones for surveying and also advanced predictive technologies for geological assessments are transforming resource estimation, improving operational efficiency and attracting investments. In line with this, several private companies are progressing towards this digital transformation. For instance, Adani Enterprises is leveraging advanced geological modelling, data synthesis, high-resolution seismic surveys and satellite imagery to improve resource assessment and planning. Similarly, Hindalco has implemented a comprehensive digital framework to enhance smart mining, supply chain management, safety compliance and sustainability. Its initiatives include integrated mine management systems, drone surveys and centralised digitalisation of key processes.
Besides, continuous efforts are being made by the Ministry of Coal to improve the safety of coal mines by auditing through digital platforms. It unveiled the National Coal Mines Safety Report Portal in December 2024, aiming to reduce mining accidents and strengthen industry-wide safety measures. It also systematically tracks actions based on recommendations from various inquiries.
Growing sustainability consciousness
A prominent transition towards sustainability is taking place in the sector, with responsible mining practices emerging as a primary focus for the government. It is prioritising environmental conservation to ensure the sector’s carbon-neutral future. To facilitate this, the government has reinforced responsible mining by revising coal mining guidelines to optimise extraction and minimise ecological impact. The revised Mining Plan Guidelines for Coal and Lignite Mines 2025 seek to implement strict measures to enhance coal extraction efficiency, while ensuring broad applicability for all stakeholders. Its key elements comprise the mandatory inclusion of restoration, remediation and regeneration measures in mining plans to ensure sustainable natural resource management.
In the same direction, private players are also prioritising environmental conservation and long-term ecosystem preservation to create a carbon-neutral footprint. A major focus of their sustainability efforts is decarbonisation and adopting renewable energy. Companies such as Hindustan Zinc, Vedanta and JSW are striving for net zero emissions by 2025. Among these, Hindustan Zinc is shifting towards low-carbon metal production with the recent launch of Asia’s first green zinc brand, EcoZen. This will result in a 75 per cent lower carbon footprint compared to the global average. Similarly, Vedanta aims to achieve 2.5 GW of renewable energy by FY2030. Of this, 838 MW is under construction. Further, JSW has initiated a pilot project to construct a 3,800 tonne green hydrogen plant at Vijayanagar to optimise its energy consumption.
Turning hurdles into future opportunities
As the sector expands its wings, it is faced with considerable challenges that need to be addressed. The regulatory delays remain a key bottleneck, with less than 10 per cent of India’s Obvious Geological Potential explored and protracted timelines for obtaining statutory clearances such as environmental, forest and land acquisition approvals. Excessive regulatory burden in the mining of rare metals and REEs discourages private sector participation. To unlock the sector’s potential, it is critical to improve policy perception and create a more conducive environment for both domestic and foreign investments.
While the sector tackles these roadblocks, a promising path with a wide array of opportunities also lies ahead. The government is expected to double the sector’s GDP contribution to 5 per cent by 2030, further notching up to 10 per cent by 2047. This expansion could potentially add $500 billion to the national GDP by 2047, particularly by harnessing the opportunities in critical mineral exploration and sustainable mining. A new tailings policy is slated for introduction to facilitate the recovery of critical minerals such as gallium, tellurium and selenium from overburden dumps and tailings. In addition to this, a well-rounded development of the sector will require concerted efforts to align with global sustainability trends by ramping up digitalisation, ESG compliance and decarbonisation in mining practices.
(With inputs from a presentation by KPMG at a recent Indian Infrastructure conference)