Govt Approves Rationalisation of Royalty Rates for 4 Critical Minerals to Boost Production

The Union Cabinet of India, has approved changes to royalty rates for four key minerals essential for green energy and high-tech industries: graphite, caesium, rubidium, and zirconium. This decision aims to increase domestic production, make it easier to auction mineral blocks with these minerals, and lower reliance on imports.

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Revised Royalty Rates for Critical Minerals

Under the new royalty structure, the rates are set as follows:

• Caesium and Rubidium: 2% of the average sale price (ASP) of the metal contained in the ore produced.
• Zirconium: 1% of the average sale price.
• Graphite: Royalty on an ad valorem basis—2% of ASP for grades with 80% or more fixed carbon, and 4% for grades below 80% fixed carbon.

Previously, graphite's royalty was charged on a per tonne basis, but shifting to an ad valorem basis allows royalty revenues to better reflect price variations across different quality grades of the mineral. This aligns graphite with typical royalty structures applied to other critical minerals.

Purpose and Expected Impact

This rationalisation is intended to encourage the auctioning of mineral blocks, unlocking reserves not only of these four minerals but also associated critical elements such as lithium, tungsten, rare earth elements, and niobium. By boosting domestic output, the government aims to reduce India's import dependency—currently, about 60% of graphite used, largely in electric vehicle (EV) batteries, is imported despite existing domestic mines.

In addition to boosting economic growth and jobs in mining and related sectors, the move is expected to strengthen supply chains that are essential for India's green energy transition and high-tech manufacturing.

Mineral Significance and Applications

• Graphite is an important part of EV battery anodes because of its high conductivity and energy efficiency.  
• Zirconium is used in the nuclear energy, aerospace, and healthcare industries.  
• Caesium has applications in atomic clocks, GPS systems, precision instruments, and cancer treatment equipment.  
• Rubidium is used in fiber optics, telecommunications, and night vision devices.  

The Cabinet's approval comes alongside the government’s sixth tranche of critical mineral auctions announced on September 16, 2025. This tranche includes five graphite blocks, two rubidium blocks, and one block each of caesium and zirconium.

So far, India has nine operational graphite mines, with 27 additional blocks auctioned and 20 blocks ready for auction. The rationalised royalty rates will help bidders make more informed, competitive financial offers, facilitating a transparent auction process.

The Ministry of Mines highlighted that these minerals are vital for the green energy transition and advanced manufacturing sectors. The rationalisation aligns the royalty rates with global pricing practices and the regulatory framework under the Mines and Minerals (Development and Regulation) Act, 1957. The decision is expected to unlock economic potential, reduce supply chain vulnerabilities, and generate employment opportunities across India.