India’s current initiatives are aimed at correcting a long-standing crucial anomaly in the global rare earth supply chain. Representational image: Freepik
India’s rare earth push targets China reliance, but scale, capacity pose challenges
Domestic processing infra is still nascent, regulatory hurdles remain, environmental clearances are slow, and tech gaps constrain progress
After years of warning signs, India is finally waking up to the strategic vulnerability posed by China’s grip over rare earth supplies.
The Union Budget for 2026-27 lays out a plan to create rare earth corridors spanning Odisha, Kerala, Andhra Pradesh and Tamil Nadu, as New Delhi seeks to cut import dependence and secure critical minerals.
The corridors are intended to knit together mining, processing, research and manufacturing of rare earth elements and Rare Earth Permanent Magnets (REPMs), the high-performance magnets critical for electric vehicles, wind turbines, aerospace systems and defence equipment.
Less dependence on China
“The real impact of the announcement may take some time to materialise, but the government has made its intention to reduce dependency on China very clear,” Sameer Patil, Director of the Centre for Security, Strategy and Technology at the Observer Research Foundation, told The Federal.
The Budget builds on policy measures introduced over the past year, as New Delhi begins to address its dependence on imported rare earths.
It follows the approval in November 2025 of a Rs 7,280 crore Rare Earth Permanent Magnet (REPM) Manufacturing Scheme to establish 6,000 tonnes per year of integrated magnet capacity, supported by Rs 6,450 crore in sales-linked incentives over five years, and a Rs 750 crore capital subsidy for advanced facilities.
Crucial anomaly
India’s current initiatives are aimed at correcting a long-standing crucial anomaly in the global rare earth supply chain. Despite holding some of the world’s most substantial mineral reserves, the country has for decades remained heavily dependent on imports, particularly from China.
Why India is pushing rare earth minerals
♦ Heavy dependence on China for magnet imports
♦ China’s export curbs exposed supply chain risks
♦ Rare earths critical for clean energy technologies
♦ Strategic needs of defence and aerospace sectors
♦ Vast domestic reserves remain under-utilised
♦ Need to build domestic processing and manufacturing capacity
Official trade data show that between fiscal years 2022-23 and 2024-25, China accounted for between 59.6 per cent and 81.3 per cent of India’s permanent magnet imports by value, and between 84.8 per cent and 90.4 per cent by quantity.
New Delhi’s push comes against the backdrop of Beijing’s tightening of rare earth exports in 2025, which shook global supply chains and underscored the vulnerability of industries dependent on these critical materials.
China still dominates processing and magnet manufacturing, controlling more than 90 per cent of global refining capacity and magnet output, making it the linchpin of the tech and clean energy value chains.
Under-exploited in India
India’s resource potential, by contrast, has until now been under-exploited.
Government data indicate the country holds an estimated 13.15 million tonnes of monazite, a mineral rich in rare earths, containing about 7.23 million tonnes of rare earth oxides (REO), spread across coastal and inland deposits in Andhra Pradesh, Odisha, Tamil Nadu, Kerala, West Bengal, Jharkhand, Gujarat and Maharashtra.
An additional 1.29 million tonnes of rare earths are found in hard rock formations. Despite this resource base, India’s contribution to global rare earth output remains negligible.
A recent report by Amicus Growth, an industry analytics and consultancy firm that tracks mining, minerals and industrial metals sectors, estimated India accounts for roughly 6-7 per cent of global reserves but produces less than 1 per cent of total output, trailing major producers like China, which alone churned out 270,000 tonnes in 2024 compared with India’s roughly 2,900 tonnes.
The corridors initiative is a deliberate attempt to close that gap, attracting investment into domestic processing and manufacturing and reducing strategic exposure to foreign supply shocks.
It dovetails with broader reforms, including tariff exemptions on imported capital goods essential for mineral processing and the National Critical Mineral Mission to accelerate exploration and value-chain development.
Geopolitics, geography hurdles
India’s efforts to diversify supply chains have been complicated by both geopolitics and geography.
New Delhi has sought alternative sources of rare earth minerals, including tentative engagements to import from Myanmar’s Kachin state, where deposits of heavy rare earths such as dysprosium and terbium are found.
Those efforts were disrupted by security instability in the region and have so far failed to yield sustained supply agreements, leaving India reliant on traditional suppliers, as previously reported by The Federal.
The Ministry of Mines has also entered into agreements with mineral-rich countries such as Australia, Argentina, Zambia, Mozambique, Peru, Zimbabwe and Malawi to secure long-term access to rare earths and other critical minerals essential for clean energy, advanced mobility, and defence applications, according to the press note.
India’s initiative is also aligned with the global thrust to reduce dependency on China for critical minerals.
US-India cooperation
The US will host the inaugural Critical Minerals Ministerial in Washington on February 4, where Secretary of State Marco Rubio is set to welcome delegations from more than 50 nations, including India, to coordinate strategies to strengthen and diversify critical minerals supply chains.
US Vice-President JD Vance and senior White House supply chain officials will deliver opening remarks at the gathering, which is intended to foster international cooperation on securing components vital to technological innovation and economic and national security, according to a US State Department statement.
For New Delhi, it presents an opportunity to align India’s rare earth ambitions with like-minded partners seeking alternatives to concentrated supply dominated by China.
Officials say such cooperation could help attract technology, investment and market access for Indian enterprises developing downstream capabilities in magnets and critical materials.
Wider cooperation
They further point out that India is a member of the Minerals Security Partnership (MSP), a grouping of major economies focused on diversifying and securing global supply chains for critical minerals.
Besides, India is also part of the Indo-Pacific Economic Framework (IPEF), which includes cooperation on clean energy and critical mineral supply chains.
The US and India are deepening cooperation on rare earth elements and critical minerals to diversify supply chains away from China. However, experts caution that this partnership cannot be taken for granted given Washington’s policy inconsistencies in recent years.
“We cannot rely solely on cooperation with the US, as it has been seen backtracking on global and multilateral commitments,” Patil noted.
Uneven development
Against the backdrop of geopolitical realities, it has become increasingly imperative for India to harness its domestic rare earth resources to their full potential. In this context, Patil said the budget announcement represents a step in the right direction.
Yet challenges remain, and not just of scale and capacity. Domestic processing infrastructure is still developing, regulatory hurdles and environmental clearances slow mining expansions, and technology gaps constrain progress toward fully integrated value chains.
Even where geological surveys have flagged rare earth potential, the pace of development has been uneven.
For example, in West Bengal’s Purulia district, the Geological Survey of India has conducted advanced G2‑level exploration and identified blocks with roughly 0.67 million tonnes of rare earth minerals. However, this remains largely on paper, pending auctions, clearances and commercial extraction plans despite its strategic value.
North-East resources
Similarly, North-East India is emerging as a potentially significant hub for rare earths, though development remains limited.
The GSI data show that Arunachal Pradesh’s Papum Pare district hosts delineated REE‑bearing rock resources of about 2.15 million tonnes, with an average grade of roughly 1.08 per cent total rare earth elements including yttrium.
In Assam, geochemical surveys of the Jashora and Samchampi alkaline complexes have identified REE concentrations ranging from 1,000 to 5,000 parts per million (ppm).
Meghalaya’s rare earth potential is also acknowledged, but systematic development and investment in the region remain minimal.
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