India’s rare earth paradox: Can policy, tech and partnerships close the gap between ambition and supply chain reality?

As the world rushes toward electric mobility, renewable energy, and digital connectivity, a group of obscure minerals has quietly become indispensable. Rare earth elements—names like neodymium, dysprosium, and praseodymium—sit at the heart of nearly every modern technology. They are what make motors whisper instead of roar, smartphones vibrate with precision, and wind turbines spin silently across distant coastlines.

India holds significant reserves of these critical minerals—by some estimates, the fifth largest in the world. And yet, when supply lines tighten, as they did earlier this year, the country finds itself scrambling. Over 90% of the magnets that power India’s electric vehicles, wind turbines, and defence platforms are imported—most of them from China.

When China imposed export controls on key rare earth magnets in April, the impact on Indian industry was swift. Deliveries were delayed. Prices surged. Manufacturers began flagging production risks. For a country trying to scale up its clean energy transition and reduce strategic dependencies, the alarm bells could not have been louder.

India is now moving to correct course.

From Extraction to Sovereignty

India’s traditional approach to rare earths has been limited in scope. Monazite-bearing sands, rich in rare earths, have long been mined in coastal states such as Odisha, Tamil Nadu, and Kerala. But most of the extracted material was shipped out in raw or semi-processed form. Value addition was someone else’s job—typically done in East Asia.

That model is changing. State-run IREL (India) Ltd., which sits at the core of India’s rare earth programme, has halted overseas shipments and begun expanding its domestic processing capacity. A new magnet production facility in Visakhapatnam, commissioned last year, marks a shift in direction. The volumes are small—just 3 tonnes per annum—but the signal is important.

The government is preparing a ₹5,000 crore production-linked incentive scheme to support downstream processing and magnet manufacturing. A target has been set to scale neodymium-praseodymium oxide processing to 450 tonnes per annum by 2026, with further capacity expected to follow. These are incremental steps—but necessary ones.

A Ticking Clock

The scale of India’s challenge becomes clearer with a closer look at the numbers. Each electric vehicle uses between 1 and 2 kilograms of rare-earth permanent magnets. With the country targeting 10 million EVs by 2030, the projected demand for magnet-grade rare earths could touch 20,000 tonnes in the coming years.

Current domestic output falls well short—less than 500 tonnes annually. The shortfall, already substantial, could triple by the end of the decade. Without urgent intervention, the gap between ambition and capacity will only widen.

Traceability and Trust

There is another dimension to the rare earth story. As global buyers become more discerning, the provenance of materials matters. Traceability—knowing where minerals come from, how they’re processed, and under what conditions—is now a commercial and reputational requirement.

India is taking early steps to address this. A blockchain-based traceability system is being developed to monitor the movement of rare earths from mine to final product. Each batch of material would carry a digital record—detailing its origin, refining process, and compliance with environmental and labour standards.

This is not merely a technological experiment. In the coming years, supply chains that cannot demonstrate transparency are likely to be excluded from international contracts, particularly in Europe and the United States.

Mining with Responsibility

Rare earth mining is not without cost. Poorly managed operations have left behind a trail of contamination in many parts of the world. India has an opportunity to pursue a different path—and has signalled its intent to do so.

Environmental clearance procedures have been tightened. Zero-liquid discharge is now standard for coastal processing units. Community participation and employment generation are being integrated into mining leases. The Bureau of Indian Standards is drafting ESG norms specifically for the rare earth industry—guidelines that could become prerequisites for both domestic approvals and global trade.

Secondary Supply: The Promise of Recycling

India is also looking beyond traditional mining. Rare earths are embedded in countless devices already in circulation—from smartphones and air conditioners to discarded electric motors. If recovered efficiently, these "urban mines" could provide a significant source of critical materials.

Government think tanks estimate that by 2035, India could recover 2,000 to 3,000 tonnes of rare earths annually through recycling alone. Research laboratories under CSIR and IITs are already piloting hydrometallurgical processes to reclaim neodymium and dysprosium at industrial scales. What is needed now is commercial adoption and policy support.

Strategic Partnerships

India’s rare earth ambitions are backed by a growing network of international partnerships. The India–U.S. Initiative on Critical and Emerging Technology (iCET) includes rare earth collaboration as a core pillar. Australia’s Lynas Corporation is exploring potential refining ventures in India. Japanese firms—long-time leaders in magnet technology—have shown a willingness to transfer knowledge in exchange for a reliable, traceable supply base.

If these collaborations bear fruit, India could emerge not just as a self-reliant producer, but as a reliable alternative in a tightly controlled global market.

The Opportunity, and the Risk

India’s rare earth reserves have long been acknowledged. The country’s scientific capabilities are well established. What has been missing—until recently—is alignment between national strategy, industrial policy, and international opportunity.

That alignment is now emerging.

But the window will not stay open forever. Other countries are also racing to secure supply chains, develop magnet plants, and woo buyers with clean, transparent, ESG-compliant materials. If India wants to lead, it must move with speed and precision. This is not simply a matter of mineral strategy. It is about the credibility of India’s clean energy transition, the competitiveness of its manufacturing sector, and the resilience of its broader economy. Rare earths may be hidden in the crust of the earth. But the choices made around them will shape industries, partnerships, and national fortunes for decades to come.

Views are personal. The author is Environmental Manager, Foxconn EV System LLC.