Streamlined Administration Key to Unlocking India’s Natural Resources Wealth: Vedanta’s Agarwal
16 May 2017 by Staff
Vedanta Resources Plc chairman Anil Agarwal believes the key to harnessing and properly utilizing India’s vast wealth of natural resources involves establishing a national ministry dedicated to managing it.
Agarwal went on record by writing an op-ed on the subject that was published by The Indian Express on Monday. He argued that India’s natural resources picture today parallels that of the United States a century ago – both benefit from a thriving democracy, an abundance of natural resources, a large labor pool, and a handful of entrepreneurs poised to devote expertise and funds to drive their country to meet its potential.
With over US$1 trillion in natural resource wealth waiting to be used, Agarwal believes the key to unlocking the vault can be found in increased exploration.
“An open and simple exploration policy for extraction of natural resources will make India an economic powerhouse that will have the potential to eradicate poverty,” he explained. “India’s current underutilisation of resources tells an almost unbelievable story. Despite having similar geology to North America, Latin America, Australia and South Africa, we produce only 20% of our natural resource requirements.”
He goes on to point out that India’s expenditure on exploration activities is minuscule in terms of raw numbers as well as in light of the fact that a tremendous portion of the country’s raw materials are imported.
“What surprises is bauxite (a raw material used to make aluminium) mining in the country,” opines Agarwal. “In spite of rich reserves of over 3.5 billion tonnes, that can make India one of the top five aluminium producers in the world, the country is not able to mine bauxite for over the last 35 years.”
“India has failed to tap the large aluminium market, widely known as a green metal, and lost out to countries like China which fully imports the raw material,” he continues. “Even with 3.5 billion tonnes of bauxite—the third largest reserve in the world—India manages an annual production of less than 2 million tonnes of aluminium. In contrast, China that has no reserves of bauxite produces about 20 million tonnes of aluminium annually.”
Agarwal posits that the solution to unleashing India’s mineral wealth is a transparent manner for auctioning natural resources. The process must be a sustainable one, with appropriate revenue sharing and assigning the highest possible royalties. Coupled with a simplified regulatory framework, such a landscape will encourage investment in natural resources and lift the economy along the way. In order to take this dream and make it a reality, Agarwal suggest a single ministry dedicated to implementing the vision in a streamlined manner.
Then, and only then, will India take its place among the world’s leading natural-resources juggernauts, Agarwal concludes.