Avoiding another rare earths crisis: Making aluminium central to India’s self-reliance strategy

India stands at a critical inflection point in its industrial growth story. The global race for strategic materials is reshaping economic and geopolitical power, and aluminium today is as vital as oil was in the 20th century. It powers electricity grids, strengthens infrastructure, lightens vehicles, and enables the clean-energy transition. Yet, as India articulates its vision of Viksit Bharat 2047, the question remains: will we secure our aluminium future or repeat the rare earths mistake?

The Rare Earths Lesson: A Warning India Cannot Ignore

China’s dominance in rare earths offers a stark warning. With control of over nearly 70% of global mining and close to 90% of refining of heavy rare earths and permanent magnets, China has used this leverage as both an economic and geopolitical tool. In April 2025, it imposed stringent export controls citing national security concerns, disrupting global supply chains and reminding the world that strategic materials can become instruments of trade pressure overnight.

The fallout was severe. Manufacturers worldwide faced skyrocketing costs and supply shortages. In contrast, Japan escaped the worst of the crisis due to its forward-looking approach of diversifying sources, building stockpiles, investing in recycling, and developing alternative technologies shielding its industries from China’s mineral squeeze. India did not. Despite having reserves and technical capability, we failed to build domestic processing and value-addition capacity. Today, India depends on imports for materials critical to its own clean-energy and electronics industries.

Aluminium could be next. In an increasingly protectionist world, shortage of aluminium supplies can leave India vulnerable and could derail its net-zero, manufacturing, and infrastructure goals. India, with its abundant bauxite reserves and competitive energy costs, has a natural advantage, but only if it leverages it through timely policy action. 

Why Aluminium Matters: The Strategic Metal Powering India’s Growth

Aluminium is integral to every pillar of India’s growth: defence, aerospace, power, transportation, and construction. It is officially recognised as a critical and strategic metal by the US, the EU, Nato, and India. Demand has more than doubled in the last decade and is projected to rise from 5.5 million tonnes today to 8.5 MTPA by 2030 and nearly 37 million tonnes by 2047, according to the Aluminium Vision Document published by the Government of India.

Yet, this demand boom is not matched by domestic capacity expansion. Imports already meet over 55% of India’s aluminium demand, with import values rising 72% in just five years to ₹78,000 crore in FY26. This growing dependence undermines India’s industrial resilience at a time when global supply chains are tightening. 

The bigger risk is that India could become a dumping ground for low-quality, underpriced aluminium products and scrap from surplus-producing regions and nations such as the US, the UK, the EU, China, Russia, the Middle East and ASEAN countries. These imports often bypass environmental and quality standards, threatening India’s manufacturers and sustainability goals. 

The Rare Earths Parallel: A Price for Policy Inaction

The rare earths saga shows what happens when policy lags behind strategic need. India, despite having the eighth-largest bauxite reserves globally, estimated at 4.95 billion tonnes, failed to develop adequate domestic aluminium infrastructure. Lax trade rules eroded this advantage, leaving us dependent on imports for critical metal.

Aluminium is following the same risky trajectory as rare earths. Without urgent action to provide domestic market access, the future investments in the sector will be limited and India could face supply shocks that derail its net-zero targets and infrastructure plans. 

A Case for Policy Reform

To secure its aluminium future and to attract new investments worth more than ₹20 Lakh crore ensuring high quality domestic supply, India needs decisive policy action:

• Raise basic customs duty on all aluminium products to 15%

• Introduce stringent BIS quality standards for imported scrap in line with global peers

These measures will strengthen India’s aluminium ecosystem.

Building a Self-reliant Aluminium Ecosystem

India has the fundamentals to become the “Aluminium Capital of the World” with ample bauxite reserves, skilled workforce, and a fast-growing market. A balanced aluminium ecosystem spanning primary smelting, downstream manufacturing, and domestic recycling can generate over one million new employment opportunities (direct and indirect) and unlock ₹20 lakh crore in investments by 2047.

The Path Ahead: Choosing Leadership Over Dependency

India will need to follow a combination of the path adopted by the US and China, that is, to restrict imports and provide domestic market access by imposing 15% tariffs on imports to attract aluminium investments, and, fast-track development of domestic capacities to safeguard itself from future import dependency. The coming decade will decide whether India becomes a producer or the industry lags due to lack of sufficient aluminium.

India must act now. With decisive policy reforms, aligned duty structures, and stringent quality safeguards, we can secure our aluminium future, strengthen industrial resilience, and accelerate the journey towards Aatmanirbhar Bharat.

If rare earths were the first fault, aluminium cannot be the second.

(The author is a Development Economist and former Secretary, Government of India. Views are personal.)