The Union Cabinet’s recent decision to rationalise royalty rates for India’s expanding critical minerals sector has been widely welcomed as a long-needed structural reform. At a time when the global race for strategic minerals like lithium, cobalt, nickel, and rare earths is intensifying, India’s move signals its intent to emerge as a serious player in the global supply chain—and reduce strategic dependence on foreign imports.
But even as policymakers celebrate the reform, experts caution that a more urgent battle remains unresolved: the persistent “royalty theft” and leakages occurring in mining districts across the country. Unless these systemic ground-level problems are addressed, the benefits of the Cabinet’s decision may not fully translate into public revenue or long-term sectoral efficiency.
Why the Cabinet’s Royalty Reform Matters
The Cabinet has approved a uniform, simplified, and globally competitive royalty structure for key critical minerals—particularly those essential for:
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EV battery manufacturing
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Semiconductor production
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Renewable energy components
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National security and strategic industries
This rationalisation is expected to:
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Attract greater private and global investment.
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Enhance participation in mineral auctions.
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Accelerate domestic exploration and commercial mining.
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Strengthen India’s position in global supply chains.
In essence, the reform aligns with India’s ambition to build strategic mineral independence and insulate itself from geopolitical disruptions.
The Unaddressed Challenge: Royalty Theft on the Ground
While policy reform is crucial, the reality in many mining belts tells a different story—one marked by chronic under-reporting, manipulation, and revenue leakage.
Common forms of royalty theft include:
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Under-reporting of actual mineral extraction volumes.
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Manipulated weighbridges and falsified transport challans.
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Illegal mining in non-auctioned or protected areas.
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Collusion between local officials, contractors, and political intermediaries.
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Royalty amounts shown on paper but never deposited in government accounts.
Experts estimate that revenue losses from royalty misappropriation run into hundreds of crores every year in major mineral-producing states.
This systemic theft undermines:
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State revenue,
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Public welfare schemes dependent on mining funds,
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And the credibility of India’s broader mineral reforms.
Why Royalty Rationalisation Alone Isn’t Enough
Critical minerals are a high-value, low-volume sector.
This means even small discrepancies in reporting translate into significant losses.
If ground-level misappropriation remains unchecked:
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Lower royalty rates may reduce official earnings without stopping illegal leakage.
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Private players may exploit monitoring loopholes.
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States may continue to lose revenue even as the sector expands.
Thus, the success of the Cabinet’s reform depends on the strength of enforcement, not just the strength of policy.
What Experts Recommend
To address the widespread leakage and corruption in mineral-rich districts, policy reform must be accompanied by strong monitoring and enforcement mechanisms:
1. Real-Time Digital Monitoring
Mandatory use of:
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GPS-enabled mining equipment
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Integrated weighbridge networks
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Drone surveillance
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Blockchain-based extraction records
2. Independent Third-Party Audits
External auditing of:
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Extraction volumes
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Royalty payments
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Transport logs
3. Strict Action Against Local Corruption
Consistent application of:
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Mining laws
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Prevention of Corruption Act
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Bharatiya Nyaya Sanhita provisions
Especially in districts known for illegal mining.
4. Transparent Public Dashboards
States should publish monthly online reports showing:
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District-wise extraction
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Royalty collected
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Discrepancy patterns
5. A National-Level Critical Minerals Enforcement Cell
A specialised enforcement body—similar to the NIA model—focusing on cross-state mining crimes involving strategic minerals.
Policy Reform Must Meet Ground Reality
The Cabinet’s move is a forward-looking step that strengthens India’s position in the global critical minerals sector.
But its real success will be determined not in policy documents, but in the mines, transport corridors, and revenue offices where corruption is deeply entrenched.
If India wants to fully unlock the potential of its mineral resources, the next phase must be uncompromising:
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Eliminate royalty theft.
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Enforce strict accountability.
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Ensure every rupee due to the exchequer is collected.
Only then will the Cabinet’s critical minerals reform deliver the transformation India truly needs.
