India’s critical-minerals debate often begins with a simple problem: we do not have enough mines. That is certainly true for lithium. But it may also be the wrong place to end the conversation.
NITI Aayog estimates that, under its Net Zero scenario, India will require about 66,000 tonnes of lithium between 2025 and 2030, rising to 1.62 million tonnes between 2031 and 2050. Nickel requirements rise from about 254,000 tonnes to 3.76 million tonnes, graphite from 700,000 tonnes to 15 million tonnes, and copper from 1.88 million tonnes to 20.6 million tonnes.
These are cumulative numbers, but they point to a simple reality: India will have a very large exposure to minerals it does not currently produce in sufficient quantities. The obvious response is to secure mines overseas and enter long-term offtake agreements. That is essential, and India is already moving in that direction. But securing the mineral is only the first step. We also need to think about what happens once it reaches India.
Managing Price Volatility Risks
India imports most of the crude oil it consumes, yet has a substantial domestic market for crude oil and its derivatives. Gold offers another example. India produces little compared with consumption, but gold remains one of its most actively traded commodities. Copper, aluminium, zinc and nickel are similarly traded despite their dependence on global supply chains.
The scale is significant. In FY2024-25, MCX recorded around ₹70 lakh crore of futures turnover and ₹495 lakh crore of options turnover. It also has established clearing, warehousing, assaying and physical-delivery infrastructure. India does not need to build a commodity market from scratch.
This matters because critical-mineral prices have shown just how much risk companies face.
Lithium is the clearest example. Prices rose almost eightfold during 2021-22 before falling by more than 80% from their 2023 levels. By early 2024, prices had fallen from above $80,000 a tonne to around $13,000. Nickel, cobalt and graphite have also seen sharp swings.
Battery prices have moved rapidly too. BloombergNEF estimates that average lithium-ion battery pack prices fell 20% in 2024 to a record low of $115 per kWh, following a 14% decline in 2023 and further to around $ 50 per kWh in 2025-26.
These movements matter far beyond commodity traders. They affect mine economics, battery costs, procurement contracts, investment decisions and project valuations. Indian manufacturers will have to manage this volatility whether India has its own mines or not. This is where a domestic market could play an important role.
Creating ‘Critical-Mineral Exchange’
But India does not need to create a global lithium price. What it needs is a reliable Indian reference price. That price could start with the international benchmark and incorporate the costs of bringing material into India: freight, taxes, the rupee-dollar exchange rate, financing, quality and domestic demand. With the Ministry of Mines (MoM), amendments to the Mines and Minerals (Development and Regulation) Act (2025) having cleared the way for the development of minerals market/exchanges, this could soon become a reality.
Initially, the market could be an import-led physical one. Standardised lithium carbonate and lithium hydroxide could be traded through a transparent platform. Independent assaying and approved warehouses could establish confidence in quality and quantity. Verified warehouse receipts could also make inventory easier to finance.Once enough transactions take place, India would have something valuable: its own price data.
Only then would it make sense to consider forwards, futures and options. A battery manufacturer could hedge future purchases. A processor could protect its margins. Investors could manage exposure to a commodity that will become increasingly important to the Indian economy.
A domestic market could also improve information. An Indian buyer today may sit several steps away from the mine, with traders, freight, processing and financing costs between producer and user. A transparent market would make these costs easier to understand and provide a common reference price.
The opportunity is therefore bigger than creating a “lithium exchange”. India should build a broader critical-minerals market, beginning with lithium and eventually covering nickel, cobalt, graphite, copper and rare earths. Banks, NBFCs and alternative investment funds could finance inventories, processing, recycling, logistics and overseas offtake. The absence of domestic mines should not become an excuse to wait. Crude oil and gold show that countries can develop deep commodity markets even when they depend heavily on imports.
India’s objective should be to control more of the chain between the mine and the factory: secure overseas supply, bring material into India, process and store it, establish transparent prices, finance inventories and eventually allow companies to hedge their exposure.
India may not control the lithium ore today. But it can still build the market through which lithium enters, is processed, financed, priced and consumed.
By Vaibhav Pratap Singh and Rati Verma are, respectively, Executive Director and Research Consultant at the Climate and Sustainability Initiative. (Views are personal)
Originally published in Outlook Planet.
