Rare earth minerals are a group of 17 elements (15 lanthanides plus scandium and yttrium) that are critical for modern industries. They are essential in producing electric vehicles, wind turbines, smartphones, semiconductors, and advanced defence systems. These minerals are indispensable in making high-performance magnets used in aerospace and green technologies.
India and Rare Earth Minerals
India possesses nearly 8% of the world’s rare earth reserves but accounts for under 1% of total global output. To close this gap, the government is promoting domestic exploration, refining, and value-added manufacturing.
Proposed measures include incentive packages of INR 3,500-5,000 crore and the creation of a National Critical Mineral Stockpile to cut import reliance and strengthen supply security.
However, India still lacks industrial-scale refining and magnet manufacturing capacity. Expanding domestic R&D and forming technology partnerships with allies like Australia, Vietnam, and Brazil could accelerate the development of India’s downstream processing and integrated supply chains.
China: A Global Monopoly
China began building its dominance in the rare earth industry as early as the 1990s, when it declared these minerals “strategic resources,” restricted foreign participation, and subsidised domestic producers. Over time, Beijing consolidated many small firms into a few state-backed giants, giving China an early lead in global rare earth production.
By the mid-2000s, China accounted for more than 97% of global rare earth production, establishing an almost complete monopoly. Even today, it continues to dominate the supply chain - controlling roughly 70% of global output, 90% of refining capacity, and 85-90% of the world’s magnet manufacturing.
What India Can Do
India can position itself as a trusted, democratic alternative in the rare earth supply chain. To do so, India may:
- Treat rare earths as strategic minerals - not just commodities.
- Provide dedicated support to the National Critical Mineral Mission (NCMM) to coordinate exploration, processing, and R&D under a single authority.
- Offer PLI-style incentives for magnet manufacturing, tax breaks for recycling technologies, and blended finance and green bonds dedicated to critical minerals processing.
- Build refining and magnet-making capacity through public-private partnerships.
- Promote recycling (“urban mining”) to recover rare earths from discarded electronics.
- Develop a robust supply chain via international collaborations and exploration in its coastal and northeastern regions.
DhruvStar Industry Insights: What It Means for the Indian Industry
- Industry Opportunity: India can emerge as a rare earth value-add hub by investing in refining, magnet production, and coastal R&D clusters, capturing far greater export value than raw mining.
- Integration with High-Value Demand Sectors: Rare earths are directly linked to EV, renewable, and defence value chains. OEMs (Original Equipment Manufacturers) in these sectors may invest upstream to stabilise raw material access and pricing.
Sources
[1] Mint
[2] Economic Times
[3] WSJ
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