Mumbai: India, despite sitting on one of the world’s richest troves of rare earth minerals, finds itself caught in a paradox. With an estimated 6.9 million tonnes of reserves, placing it fifth globally, but the country continues to rely heavily on China for critical electric vehicle (EV) components. The irony is stark: the natural wealth exists, but the ecosystem to harness it remains underdeveloped. India’s rare earth extraction, primarily handled by state-owned IREL, remains modest, with around 2,900 tonnes produced annually, most of it channelled into defence and atomic energy applications. There is virtually no downstream industry to process these ores into magnets or other components vital for EVs.
Meanwhile, China’s dominance in the rare earth supply chain remains unshaken. Over 90% of the world’s rare earth magnets are processed and manufactured in China. When China imposed export curbs in April 2025, it caused immediate tremors across global markets. In India, the effect was severe as automakers faced looming component shortages, with inventories projected to last just two to three weeks. The Chinese grip extends beyond magnets to battery cells, control units and other key electronic parts, giving it immense leverage over the global EV transition.
India’s inability to capitalise on its rare earth potential stems from multiple structural hurdles. Mining these minerals involves complex environmental and regulatory procedures, particularly as monazite, an important source of rare earths, contains thorium, placing it under tight government control. Even in states where blocks have been auctioned, like Karnataka, Uttar Pradesh and Chhattisgarh, there is neither refining capacity nor adequate infrastructure to process the material. IREL has made some progress in refining and pilot-level magnet research, but the scale remains insufficient. The private sector, for its part, faces delays, discouraging policy frameworks and a lack of clarity.
Recognising the risks of overdependence, the Indian government has begun to push back. A Rs. 5,000 crore incentive scheme for rare earth development and the broader Rs. 34,300 crore National Critical Minerals Mission are being rolled out to encourage exploration, refining and magnet manufacturing. Plans are underway to halt rare earth exports to Japan and instead process them domestically. Companies like Mahindra and Uno Minda have shown interest in local magnet production. Additionally, diplomatic efforts are in motion to secure raw materials from nations like Australia, Myanmar and Central Asian republics, while e-waste recycling is being considered to tap into urban mining.
India’s journey toward self-reliance in rare earths demands a bold industrial leap. It must synchronise mining, refining, manufacturing and recycling, along with global partnerships, to secure its supply chains. Without such a coordinated effort, India risks being forever a resource-rich but capability-poor nation in a century defined by green technologies.
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