As supply chains are disrupted by China’s limitations on exporting rare earth magnets, Indian automakers are voicing worries. Important businesses like electric automobiles are impacted by these restrictions, which are justified by national security concerns.
Due to pressure and incentives from the Indian government, many of them have made significant investments in component manufacture; however, the vital magnets needed for EV manufacturing are stranded at Chinese ports. What steps can India take to protect its supplies of rare earth elements? How might India emerge as a key participant in the supply chain for rare earths?
India has made a daring shift in its industrial and strategic thinking with its Rare Earth Policy 2025. Despite having sizable domestic reserves, India has long been reliant on China for refined rare earths. However, it is currently working to become a major role in the global rare earth supply chain. Supply lines are already under stress as a result of Beijing’s decision to place stringent restrictions on the export of rare earth magnets, which are essential for both electric and gasoline-powered vehicles and defense equipment.
The Society of Indian vehicle Manufacturers (SIAM) warned in early April that component inventories could run out by June, making India, the third-largest vehicle market in the world, one of the countries most severely impacted by China’s policy change. Indian automakers warned the government that if Chinese export restrictions are maintained, production may stop.
To apply salt to the wounds even more Chinese suppliers are allegedly asking Indian companies to buy complete motor assemblies in order to get around red tape. Since component manufacturers have made large investments in their manufacturing capabilities, importing complete motor assemblies puts them at risk of both price increases and actual market share loss.
Minerals can be used as an instrument of coercion, as evidenced by China’s recent restrictions on REE exports to US defense companies and its threats against Japan and Taiwan. To maintain their supply of rare metals, even US President Donald Trump had to hurry in for an urgent meeting with the Chinese leader.
“Economy is not the only factor here. A top Indian official stated, “It’s about national resilience.”
India’s change is transformative rather than merely reactive.
The foundation of contemporary technology and the defense sector are rare earth elements, or REEs:
EV motors and wind turbines require neodymium, dysprosium, and terbium; catalysts and optical systems depend on lanthanum and cerium; radars and missile guidance systems depend on yttrium and samarium.
Despite producing roughly 61% of the world’s rare earth elements, China owns more than 85% of the world’s processing capacity, which gives Beijing significant geopolitical clout.
Although rare earths are not particularly scarce or used in large amounts, the ability to create and purify them is necessary in this situation.
The amount of rare earth oxide (REO) equivalents in India is around 6.9 million metric tons (MMT).
• This represents about 6% of the total worldwide.
• There are significant deposits in:
o Beach sands rich in monazite (Andhra Pradesh, Kerala, Tamil Nadu)
Complexes of inland alkali (Jharkhand, Chhattisgarh, Rajasthan)
• It is anticipated that this number will expand quickly with further research and the assistance of private industry.
About 7,000–8,000 metric tons of rare earth oxides and metals were imported by India in 2023–2024, which is minuscule compared to the enormous deposits we possess.
Rare earth metals and magnets are needed in very small amounts for a variety of applications, including electric motors, braking systems, smartphones, aerospace, missile technology, and electric vehicles. Although they are needed in small amounts, rare earth metals are crucial components for these devices, and production would not be possible without them.
India imports the majority of its refined rare earth elements, even though it possesses an estimated 6% of the world’s rare earth reserves. Among the obstacles have been:
• Antiquated regulatory structures
• Limited access to the private sector
• No scale for domestic magnet manufacturing or refinement
Bottlenecks in the environment
India became exposed to supply interruptions and strategic pressure as a result.
Announced in March 2025, India’s new policy seeks to:
1. Allow the private sector to participate in exploration and mining.
2. Create the Indian Rare Earth Mission Authority to oversee the development of integrated projects.
3. Technologies for rapid refining and separation that prioritize ESG compliance.
4. Establish key rare earth strategic reserves.
5. Encourage value-added businesses under the Make in India banner, such as alloys, magnets, and EV components.
Strategic Alliances
India has inked tech-cooperation agreements and bilateral MOUs with:
• Australia: for collaborative R&D in mining and processing
• Kazakhstan and Uzbekistan: regarding the investment and sourcing of raw materials
• Japan and Vietnam: for technical assistance and sharing
The goal of these partnerships is to create a supply corridor for rare earths that is not Chinese.
The Path Ahead: India’s Needs
In order to become a real powerhouse in rare earths, India needs to:
• Make infrastructural investments in refining and magnet manufacturing
• Provide REE-based industries with production-linked incentives (PLIs).
• Establish R&D and talent centers tailored to REE.
• Strike a balance between rigorous environmental oversight and mining expansion.
Control over rare earths is strategically valuable, even though they are not geologically uncommon. India may become a significant influencer in the global technology and defense scene in addition to being a supplier if it implements the Rare Earth 2025 agenda correctly.
As India acquires strength in the upcoming decades and moves up the geopolitical ladder toward great power status, the minerals under its soil may very well be the driving force behind its ascent.
