India’s Rare Earth Strategy: Unlocking Potential for Resilience

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In a world increasingly powered by electric vehicles, renewable energy, and advanced defence systems, rare earth magnets, particularly neodymium magnets, have become indispensable. These small yet powerful components are critical to technologies such as wind turbines, electric motors, smartphones, and missile guidance systems.

For India, building self-reliance in rare earth magnet production is no longer optional. It is a strategic imperative. However, despite strong policy intent and rising domestic demand, India’s mission faces formidable challenges. The country must overcome resource constraints, technological gaps, and significant investment hurdles to emerge as a credible player in the global rare earth supply chain, which increasingly shapes the world’s economic and geopolitical power dynamics.

What Are Rare Earth Elements?

Rare earth elements (REEs) refer to a group of seventeen metallic elements, comprising the fifteen lanthanides, along with scandium and yttrium. These elements play an essential role in modern technology due to their unique magnetic, optical, and electrical properties. Despite their name, REEs are not truly rare in the Earth’s crust; however, they are typically found in low concentrations and are widely dispersed, making their extraction, separation, and processing both technically complex and environmentally challenging. REEs are indispensable across a range of industries, including electronics, renewable energy technologies, defence systems, medical devices, and space and satellite applications. In an era defined by digital transformation, clean energy transition, and growing geopolitical competition, secure access to rare earths is increasingly regarded as a cornerstone of technological sovereignty and economic resilience.

Global Rare Earth Landscape: Quick Snapshot

The global rare earth landscape is marked by a significant concentration of reserves and production in a handful of countries, with China maintaining overwhelming dominance. According to the USGS Mineral Commodity Summaries 2024, China holds an estimated 44 million metric tons of rare earth element (REE) reserves and accounts for approximately 85 percent of global production. The United States follows distantly, with 2.3 million metric tons of reserves and a 9 percent share of production, while Australia holds 4.2 million metric tons and contributes around 5 percent to global output. India possesses an estimated 6.9 million metric tons of REE reserves, making it the fifth-largest reserve holder globally, yet its contribution to global production remains limited at just 2 percent. Vietnam, despite having significant reserves of around 22 million metric tons, currently contributes less than 1 percent to global supply. This concentration highlights both the opportunities and the vulnerabilities in global supply chains, with India’s untapped potential offering a strategic avenue for diversification.

Decoding India’s Existing Rare Earth Reserves

Despite possessing approximately 6 percent of global rare earth reserves, India’s production remains negligible. According to Statista, India produced only 2,900 tonnes of rare earth elements (REEs) in 2024, a figure unchanged since 2012. This accounts for merely 1 percent of global output, highlighting the significant gap between India’s resource potential and its actual exploitation.

Where Are India’s Rare Earths Found?

India’s rare earth resources are primarily extracted from monazite-rich beach sands along its coastline. However, these deposits present inherent limitations in terms of both composition and extraction challenges. The largest site, operated by Indian Rare Earths Limited (IREL), is the Orissa Sands Complex (OSCOM), where approximately 7.5 million tonnes of sand are processed annually. From this, around 600,000 tonnes of industrial minerals are obtained, but rare earth elements form only a small fraction of the total output. Even fewer high-value magnet metals like neodymium and praseodymium are extracted, while critically important heavy rare earths such as dysprosium and terbium, vital for advanced technologies, are absent from these deposits.

In addition to Odisha, IREL operates extraction sites in Kerala and Tamil Nadu, collectively contributing to the country’s total annual output of around 2,900 tonnes of rare earths. Extracting even this modest volume requires processing an estimated 10 million tonnes of sand, underscoring the resource-intensive and environmentally sensitive nature of India’s rare earth industry.

Bottlenecks Hindering India’s Rare Earth Potential

India’s stagnant output in the sector over the past decade is primarily attributed to structural and regulatory bottlenecks. These include a lack of new mining leases, delayed environmental clearances, and restrictions under the Coastal Regulation Zone (CRZ). Forest clearances and opposition in densely populated coastal areas further complicate the expansion of rare earth operations. Notably, IREL has identified promising reserves in Puri district, Odisha, but mining approvals for these deposits remain pending. Given the ecological and socio-economic sensitivity of coastal regions, local governments have exercised considerable caution before granting new mining permissions.

Decoding India’s Two Main Rare Earth Reserves

1. Beach Sand Reserves (Coastal States)

India holds an estimated 13 million tonnes of rare earth reserves embedded in beach sands across several coastal states, including Kerala, Tamil Nadu, Odisha, Andhra Pradesh, Maharashtra, and Gujarat. However, harnessing these reserves remains fraught with regulatory hurdles, environmental restrictions, and local community concerns.

2. Ambadungar Carbonatite Complex (Chhota Udepur, Gujarat)

Another significant reserve attracting national attention is the Ambadungar Carbonatite Complex in Gujarat’s Chhota Udepur district, with an estimated 7 million tonnes of rare earth reserves. However, technological challenges persist. According to P. Krishnamurthy, a leading expert on carbonatites and rare earths with the Geological Survey of India (GSI), the mineral grains in this deposit are ultra-fine, detectable only under a microscope. This ultra-fine nature makes beneficiation and extraction technologically complex and significantly more cost-intensive compared to conventional deposits.

Resource and Supply Chain Constraints

India holds an estimated 6.9 million metric tons of rare earth reserves, making it the fifth-largest reserve holder globally. Yet, a significant portion of these resources remains untapped or technologically challenging to exploit. At the same time, the global rare earth supply chain is heavily concentrated, posing strategic vulnerabilities for many nations. According to the USGS Mineral Commodity Summaries 2024, China accounts for nearly 85 percent of global rare earth oxide production and maintains dominant control over every stage of the supply chain, from mining and processing to the fabrication of high-performance magnets. Such overwhelming dependence exposes countries to supply disruptions, price volatility, and geopolitical risks. Recent developments have highlighted these vulnerabilities. In 2023, China imposed export restrictions on critical rare earth processing technologies, limiting access for foreign companies. Growing tensions between China and Western nations, particularly over semiconductors and green technologies, have further intensified calls for supply chain diversification. In response, major economies have introduced strategic policy measures such as the US Inflation Reduction Act (2022) and the EU Critical Raw Materials Act (2023), both aimed at reducing reliance on Chinese rare earths and building alternative, secure supply chains.

Technological and Manufacturing Complexity

The production of high-performance magnets, essential for applications like electric vehicles, wind turbines, and defence systems, involves a highly complex, multi-stage process that demands advanced technological expertise. This process includes the mining and separation of rare earth ores, environmentally responsible refining and metal production, followed by precision alloy development and magnet fabrication.

According to the International Energy Agency (IEA) 2023 report, China dominates the global rare earth supply chain, controlling approximately 90 percent of rare earth refining capacity and 87 percent of permanent magnet production. In contrast, India currently processes only a small fraction of its vast rare earth reserves and possesses negligible magnet manufacturing capability.

Key technological gaps holding back India’s rare earth sector include limited processing of monazite from its beach sand deposits, the complete absence of Neodymium-Iron-Boron (NdFeB) magnet manufacturing facilities, and chronic underinvestment in rare earth metallurgy and advanced materials research and development. Bridging these gaps is critical if India aims to emerge as a credible player in the global rare earth value chain and reduce its strategic dependence on imports.

Strategic and Capital Investment Imperatives

Despite India’s abundant rare earth reserves, the sector has witnessed minimal private investment, significantly constraining its development. According to government and industry data from 2024, the Indian rare earth sector has attracted less than 150 million dollars in private investment over the past decade. In stark contrast, China invested over 15 billion dollars between 2010 and 2022 to build a comprehensive and globally dominant rare earth supply chain. Even individual players like Lynas Rare Earths in Australia have invested over 1.5 billion dollars in establishing integrated processing and supply chain capabilities.

For India to close this strategic gap, substantial investment is urgently required across critical areas, including processing and separation infrastructure, high-performance magnet manufacturing, start-ups focused on advanced applications, and the development of supporting environmental and logistics infrastructure. Policy initiatives such as the Critical Minerals Mission, Production-Linked Incentive (PLI) schemes, and KABIL for overseas mineral acquisition are positive steps, but without multi-billion-dollar domestic investment, India will struggle to build the scale and technological depth necessary to achieve global competitiveness in the rare earth sector.

Indian Government’s Key Initiatives

Recognising the strategic importance of rare earth elements, the Indian government has launched a series of targeted initiatives to strengthen the country’s rare earth ecosystem. The inclusion of rare earths in the Critical Minerals List reflects their designation as vital for national security and economic development. The Critical Minerals Mission aims to accelerate the exploration, processing, and strategic stockpiling of rare earth resources. To secure access to critical minerals abroad, India has established KABIL (Khanij Bidesh India Ltd.), tasked with acquiring overseas mineral assets through strategic partnerships.

Domestically, the role of public sector enterprises such as Indian Rare Earths Ltd. (IREL) is being expanded to scale up resource development and processing capabilities. In addition, Production-Linked Incentive (PLI) schemes have been introduced to promote indigenous high-performance magnet manufacturing, a key missing link in India’s rare earth value chain. India is also actively building global partnerships, particularly with countries like Australia, the United States, and Japan, to enhance technology access and supply chain resilience.

India’s Rare Earth Mission and Strategic Aspirations

India’s rare earth mission is closely aligned with the nation’s broader ambition to emerge as a global hub for electric vehicles, renewable energy solutions, defence manufacturing, and high-tech electronics. Rare earth elements are critical to all these sectors, making their domestic development a strategic imperative. However, capitalising on this opportunity will require more than resource availability alone. Rapid development of rare earth resources, large-scale investment in processing and advanced manufacturing, international technology partnerships, and a coordinated national strategy are essential to transform India from a resource-rich country into a competitive player in the global rare earth value chain.

Conclusion

India’s quest for rare earth self-reliance is no longer just an economic aspiration. It has become a geopolitical necessity. Rare earths lie at the heart of advanced technologies, clean energy, and defence capabilities, making their secure supply vital for national security and economic resilience. As Prime Minister Narendra Modi aptly stated, “India’s time has come. We are not only meeting domestic needs but positioning ourselves as a trusted global partner in critical sectors.” With visionary leadership, sustained investment, and strategic global engagement, India has the opportunity to unlock its rare earth potential. This will not only fuel domestic growth but also position the country as a key contributor to reshaping global supply chains in favour of resilience and diversification.