An analysis of the statutory, investment and arbitration frameworks governing the bilateral opportunity in the Indo-NSW Corridor
The global energy transition has produced a new class of strategic asset. Lithium, cobalt, rare earth elements and a handful of other minerals are now as consequential to national industrial policy as oil was to an earlier generation. Electric vehicles, renewable energy infrastructure and advanced defence technologies are all critically dependent on secure and reliable supply chains for these materials. India and Australia are well placed to shape that supply chain together, and the legal architecture to support that partnership is largely in place.
India brings to this partnership a rapidly expanding manufacturing base, mining expertise, research capability and a legal framework comprehensively reformed to welcome private and foreign capital. New South Wales, for its part, hosts world-class deposits and has made a deliberate policy choice to move beyond raw mineral exports towards onshore processing a shift it is actively incentivising through its Critical Minerals Strategy. The Australia-India Economic Cooperation and Trade Agreement (ECTA), which has reduced tariffs on critical minerals traded between the two countries to zero, provides the commercial framework within which this complementarity can be exploited. Navigating it, however, requires more than commercial intent. It requires legal precision.
India Opens the Door -With Conditions
India's mining sector was, for most of its post-independence history, a domain of heavy state control. Minerals with strategic or radioactive associations were reserved for public sector enterprises. The MMDR Amendment Act of 2023 marked a departure of some consequence. Six minerals -Lithium, Beryllium, Titanium, Niobium, Tantalum and Zirconium -were removed from the atomic minerals list and opened to private and foreign exploration. The Central Government assumed direct authority to auction blocks for 24 designated critical and strategic minerals, bypassing the state-level processes that had historically caused delays. A new Exploration Licence regime, allocated by competitive bidding, was introduced to attract specialist geological firms and junior miners.
On the investment side, India permits 100% foreign direct investment under the Automatic Route for metal and non-metal ore mining, requiring no prior government approval, save the restrictions applicable to investors from bordering nations under Press Note 3. Royalty rates for 12 critical minerals were rationalized by the Cabinet in February 2024 -completing an exercise that had begun with four minerals in 2022 and three more in October 2023. The rates vary by mineral: Lithium attracts 3% of the London Metal Exchange price, Niobium 3% of Average Sale Price, and Rare Earth Elements 1% of Average Sale Price of Rare Earth Oxide -all a significant reduction from the 12% default that had previously applied. The National Critical Mineral Mission, established in 2025, provides an institutional framework for public-private collaboration in downstream processing.
Rare earth elements in India are predominantly found in Monazite; a mineral intimately associated with radioactive Uranium and Thorium, which remains a prescribed substance under the Department of Atomic Energy - not open to private or foreign mining. Downstream processing and refining are beginning to see collaborative frameworks, but the upstream remains a government preserve. Investors approaching the rare earth sector in India need to distinguish clearly between what the 2023 reforms have opened and what they have not.
New South Wales: Incentives, Strategy and the FIRB Hurdle
New South Wales operates within a dual-layered legal framework. Mining rights are governed by the Mining Act 1992; environmental approvals fall under the Environmental Planning and Assessment Act 1979. The allocation of concessions follows a sequential model -Exploration Licence to Mining Lease -subject to fit-and-proper- person tests and, unlike Indian central auction system, a first-in-time or targeted expression-of-interest process. The State has identified five priority metals: rare earth elements, scandium, copper, silver and cobalt, and is actively subsidising projects that locate within the Central West Critical Minerals Hub, reflecting a deliberate policy to build processing capacity rather than merely export ore.
The financial incentive most relevant to early-stage investors is the Royalty Deferral Scheme, launched in July 2025. Projects on the Commonwealth Critical Minerals List with a market capitalisation under $5 billion may defer up to $250 million in royalties for the first five years of operation. The Scheme applies exclusively to minerals on that Commonwealth list and expressly excludes copper and gold. The scheme is a meaningful lever on project bankability at the stage when capital is most constrained and cash flow most critical.
The most consequential legal variable for foreign investors in NSW, however, is federal rather than state. The Foreign Investment Review Board (FIRB), operating under the Foreign Acquisitions and Takeovers Act 1975, applies a national security test to investments in critical minerals businesses. State-owned enterprises and entities from non-allied nations attract particular scrutiny. Mandatory FIRB notification is required, and the national interest test is applied rigorously. Structuring corporate vehicles to satisfy FIRB -and engaging with the process early - cannot be an afterthought. It is a precondition.
Trade, Arbitration and the Absence of a Bilateral Investment Treaty
The ECTA has created a commercially significant opportunity. Tariffs on critical minerals -including titanium, zirconium, manganese, cobalt and copper ores -have been reduced to zero. The arbitrage between extraction in NSW and refining or manufacturing in India, or the reverse, is now free of the fiscal friction that previously applied. Chapter 13 of the ECTA provides a binding panel mechanism for state-to-state trade disputes.
The position on investor-state dispute settlement deserves candid attention. The Bilateral Investment Treaty between India and Australia was terminated by India on 23 March 2017. A 15-year survival clause means the treaty continues to protect investments made before that date until 2032, but no new investments can rely on its protections.
Direct investor-state dispute settlement mechanisms for new investments are consequently absent. This is not an abstract concern in a capital-intensive, long- gestation sector where regulatory decisions can materially affect project economics and where the distance between commercial disagreement and sovereign conduct is sometimes narrower than investors anticipate.
In the absence of treaty protections, the contractual architecture of each transaction carries significantly greater weight. Joint venture agreements, offtake contracts and investment documentation must contain robust international commercial arbitration clauses. Singapore (SIAC rules) and perhaps, Hong Kong (HKIAC Administered Arbitration Rules) are the preferred seats -both neutral, both with established jurisprudence in resources disputes, and both in jurisdictions whose awards are enforceable in India and Australia under the New York Convention. This is not optional drafting. It is the primary mechanism by which sovereign risk is managed in the current bilateral framework.
The India-NSW corridor in critical minerals is a genuine opportunity, grounded in complementary geology, aligned industrial policy and a functioning trade agreement. The legal framework has been substantially reformed on both sides in recent years - towards openness, private participation and streamlined approvals - is consistent and credible. What remains is the discipline of execution: early FIRB engagement, precise corporate structuring, careful navigation of India”s REE restrictions, and contractual dispute resolution mechanisms that substitute for the investor-state protections that no longer exist at the treaty level. The opportunity is real. The legal work required to access it is equally so.
Author is a senior Advocate practicing at Madras High Court. Views are personal.