India is taking strategic steps to develop its domestic rare earth element (REE) supply chain as global industries face shortages triggered by China’s export restrictions. With the automotive and tech sectors in countries like the U.S., Japan, Germany, and South Korea affected, India rare earths strategy is now focused on positioning the country as a viable alternative to China in the rare earth market.
In response, Indian officials are examining ways to expand the role of the government-owned company India Rare Earths to boost production, especially of rare earth magnets. This aligns with the broader India rare earths strategy which gained momentum after Union Minister of Commerce and Industry, Piyush Goyal, who described China’s rare earth export pause as a “wake-up call” and a strategic opening for India. Geoffrey Pyatt, a senior managing director at McLarty Associates and a former U.S. official, echoed Goyal’s views, emphasizing the importance of U.S.-India collaboration on this issue.
China’s Control and India’s Untapped Potential
Despite some recent easing of restrictions and hints at trade agreements, China continues to hold a dominant position in the rare earths sector, producing around 60% of the world’s supply and processing nearly 90%. This stronghold allows Beijing significant control over essential materials used in clean energy technologies, defense systems, electric vehicles, and more.
However, rare earths are not truly rare in nature. India possesses the world’s third-largest reserves, estimated at 6.9 million tons, behind Brazil and China, according to the U.S. Geological Survey. Additionally, nearly 35% of global beach and sand mineral deposits, which contain important rare earths, are found in India. According to D.K. Srivastava, chief policy advisor at EY India, these reserves could become critical assets if India rare earths strategy can build up its extraction and processing capabilities.
Gracelin Baskaran from the Center for Strategic and International Studies noted that India’s strategic reserves and the absence of Chinese investments in India Rare Earths make the country an appealing partner for the United States and other nations seeking to diversify their supply chains.
Building Domestic Capability and Future Plans
While India’s rare earth potential is promising, experts caution that developing the required infrastructure and expertise quickly is a significant challenge. The ability to extract, refine, and process rare earths into usable materials requires substantial investment, advanced technology, and a skilled workforce.
To address this, India rare earths strategy includes launch of the National Critical Mineral Mission in 2025 to create a framework for rare earth self-reliance. The government is also exploring public-private partnerships and incentives like capital subsidies to attract investment in mining and processing capabilities. Sources say collaboration with India Rare Earths is on the table, along with broader industry support.
Although India is unlikely to fully replace China’s role in the global REE market, experts believe it can become a key secondary supplier and help create a more resilient and diversified global supply chain. In parallel, Minister Goyal indicated that India is also seeking alternative rare earth sources and aiming to resume imports from China. A delegation from the Indian auto industry is expected to visit China soon to expedite the import process of rare earth magnets, crucial for vehicle production.
