If properly managed and regulated, India's vast, untapped mineral reserves could double the metals and minerals sector's contribution to GDP, to about 5 percent in ten years, and boost the economies of the country's impoverished eastern states. McKinsey research finds that India's annual coal, iron ore, and bauxite production alone could expand to three to five times current levels within a decade.¹ This prospect offers huge opportunities for both local and multinational companies, but bureaucracy, regulations, and poor infrastructure threaten the ability of India's metals and minerals sector to reach its potential.

By 2015 India could become one of the world's top five suppliers and top five markets for aluminum and steel (up from around tenth place today), putting these industries on par with India's coal industry. Employment in the sector could double to two million jobs, with India's eastern states in particular reaping the benefits (Exhibit 1). Furthermore, we estimate that these states could see $75 billion to $120 billion in private investment across the aluminum, coal, and steel industries (including investments in power).²

India's metals and minerals sector—rich in reserves³ and...