Government think tank NITI Aayog is developing a new national index to benchmark states on manufacturing and infrastructure performance, while also studying the feasibility of a metals and energy community within the Indian Ocean Region (IOR) to strengthen supply chains for critical resources, member Arvind Virmani said on September 18.
This comes at a time when the Indian government is taking up critical minerals in a big way to build a stable domestic supply chain, especially after China’s rare earth export restrictions in April and removing it after four months only for India.
Speaking on the sidelines of the Confederation of Indian Industry’s India Mining Summit, Virmani said the new index aims to foster competitive and cooperative federalism by enabling investors and policymakers to compare how states are performing on enabling factors for industrial growth.
The index will consolidate data on parameters such as state policies, infrastructure readiness, logistics efficiency and ease of approvals into a single composite scorecard.
“The broad aspects of the index have been worked out and a survey is underway to see how precisely it can be implemented. This is the second stage before finalisation,” Virmani said.
He noted that the framework is being designed to be comprehensive and comparable, with categories for different aspects of the manufacturing ecosystem.
The index will be housed within NITI Aayog and is intended to help both governments and investors make more informed decisions. “Investors can compare, states can compare with each other, and hopefully, what we call cooperative and competitive federalism will drive them to improve relative to others,” Virmani said.
Virmani also flagged the slow progress in critical mineral block auctions despite strong policy focus, attributing it to the complexities of auction design.
“There is a whole theory of auctions, and it is not as simple as it seems. Minerals bring in pollution, community and environmental concerns, and involve multiple levels of government. Optimal auction design is not easy,” he said, adding that auction procedures would improve gradually as regulatory and institutional frameworks evolve.
Looking ahead, Virmani revealed he is working on a research paper exploring the idea of a metals and energy community within the Indian Ocean Region (IOR) to build geographically diversified supply chains and reduce vulnerability to chokepoint disruptions such as the Red Sea blockade or the Malacca Strait bottleneck.
“You’ve all heard of the Malacca dilemma, and recently the Red Sea was blocked. So, perhaps there are safety elements to developing relations within the Indian Ocean region which are not affected by such disruptions,” he said.
The proposed community will bring together suppliers, producers and consumers of metals and energy resources from across the IOR to build stable regional supply chains.
Virmani said the idea draws inspiration from the European Coal and Steel Community, which was the precursor to the European Union. “Perhaps the easiest and quickest way to do this is through a metals and energy community. There are lots of potential metals and energy resources in the region, and the idea is to bring the suppliers, demanders and producers together. This could benefit everyone in this region,” he said.
He emphasised that the concept is still at a research stage and not yet government policy. “Please do not say it is government policy. This is just a research paper I am working on with some research assistants. Hopefully in a month or so we will have it out,” he said.
Virmani added that India will have to pursue multiple strategies to secure critical resources, combining domestic reforms, partnerships with resource-rich countries, and fostering innovation in alternative battery chemistries such as aluminium- and zinc-based technologies.
“The world slept while one country’s rare earth share went from nothing to 80-90 per cent in 20 years. We can’t reverse that overnight, but we can start building competitive supply chains now,” he said.