India is strategically accelerating its efforts to secure a robust supply of rare earth elements, critical minerals indispensable for a myriad of modern technologies, from electric vehicle batteries to wind turbines and semiconductors. This intensified focus comes amidst a palpable tightening of control by China over the global rare earth supply chain.
India’s proactive stance, encompassing new international partnerships and ambitious domestic incentive schemes, signals a determined push to insulate its burgeoning industries from potential geopolitical vulnerabilities and establish itself as a significant player in the global critical minerals landscape. The urgency of India’s current initiatives is underscored by recent developments on the global stage. China has progressively weaponised its near-monopoly over rare earth elements, imposing stringent export licence regimes on several critical minerals and magnets. These components are vital for cutting-edge sectors, including electric vehicles, advanced wind turbines, sophisticated semiconductors, and even military-grade systems. Beijing’s strategic deployment of these export controls sends a clear message: in an era of escalating trade tensions, control over these essential resources offers significant leverage.
While major economies like the United States, Europe, and Japan scramble to diversify their supply lines and reduce their reliance on China, India perceives a strategic opening and is moving decisively to capitalise on this imperative. A pivotal step in this direction was taken at the recently concluded India-Central Asia Dialogue in New Delhi, where India and five Central Asian nations expressed a mutual interest in jointly exploring rare earths and other critical minerals. A joint statement from the dialogue specifically called for an early meeting of the India-Central Asia Rare Earth Forum, underscoring the growing geopolitical urgency to establish diversified and resilient supply chains.
The bedrock of India’s ambitious strategy is the National Critical Mineral Mission (NCMM), a comprehensive initiative with a substantial outlay of ₹34,300 crore. Under the NCMM, India aims to achieve self-reliance in the sourcing and processing of critical minerals such as lithium, cobalt, nickel, and various rare earth elements. Dinesh Mahur, Joint Secretary in the Mines Ministry, recently announced that an incentive scheme for the recycling of these vital minerals is in its final stages of finalisation. This push for circular economy principles is further buttressed by the Union Budget’s specific earmarking of ₹1,500 crore for this recycling effort, demonstrating clear financial backing.
Furthermore, Public Sector Enterprises are expected to contribute a significant ₹18,000 crore to the mission, highlighting a collaborative effort between the government and state-owned entities. With a sharp focus on enhanced domestic exploration, strategic acquisition of overseas blocks, and cutting-edge technological research and development, the NCMM represents India’s most audacious gamble yet to shield its critical industries from the volatility of global supply shocks. This strategic imperative is not merely about economic self-preservation; it is intrinsically linked to India’s broader vision of fostering zero-net carbon, eco-friendly, and sustainable cities, as these minerals are the bedrock of green technologies.
The urgency underpinning these strategic moves is not solely geopolitical; it holds significant economic ramifications, particularly for India’s burgeoning automotive sector. The nascent electric vehicle (EV) industry, heavily reliant on permanent magnets for its motors, is already feeling the reverberations of rare earth shortages. Major players like Bajaj Auto have issued warnings that their e-scooter production could face disruptions from July if the current delays in Chinese rare earth exports persist. TVS Motor has echoed similar concerns, reflecting a broader anxiety across the industry. According to the Federation of Automobile Dealers Associations (FADA), only a third of its members anticipate sales growth in June. This rare earth crunch, compounded by high inventories and tight financing conditions, has compelled automakers to brace for a cautious month, casting a shadow over the otherwise promising EV rollout in the country.
China’s current dominant position in the rare earths market is the culmination of decades of strategic foresight and investment. The world first witnessed Beijing’s willingness to leverage its control in 2010 when it temporarily banned rare earth exports to Japan amidst a territorial dispute. By 2020, China had formalised its control through the Export Control Law, granting it sweeping powers to curb exports of materials deemed vital to its national security, a law broad enough to encompass critical minerals, advanced technologies, and even data. Now, with the escalating U.S.-China trade war, rare earths have unequivocally emerged as Beijing’s potent leverage. Slowed export licenses have reportedly caused production line pauses in Europe and triggered anxiety in Washington. China’s near-monopoly extends beyond just mining; it crucially controls approximately 90% of the world’s rare earth processing and refining capacity. This means that even if other nations succeed in mining the raw ores, they remain largely dependent on China for the vital downstream processing. This reality underscores why India’s current rapid push is not merely a policy choice but an economic and strategic necessity.
The road ahead for India is challenging but clear. While China refines the vast majority of the world’s rare earths, India is diligently building its domestic processing capacity. The groundwork is being laid through intensified diplomatic engagements, substantial budgetary commitments, and a sharp strategic focus on the entire value chain—from exploration to processing and recycling. The success of the NCMM will critically determine whether India can emerge as a resilient alternative in the global rare earths supply chain, thereby insulating its key industries, particularly those driving the transition to green energy and smart cities, from future supply shocks. With burgeoning global demand for electric vehicles, semiconductors, and green energy technologies, the stakes could not be higher for India’s strategic autonomy and its vision for a sustainable, equitable future.
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