Strengthening the Rare Earth Sector in India

• 03 Nov 2025

This editorial is based on “ Where is India in the rare earths game?” which was published in The Indian Express on 31/10/2025. The article highlights India’s peripheral role in the global rare earths and critical minerals landscape, underscoring China’s overwhelming dominance, the technological and policy gaps in India’s mining and processing capacity, and the urgent need for strategic investments and international collaborations to achieve self-reliance.

For Prelims: Rare Earth Elements (REEs),  Lanthanides, “Make in India”, National Critical Mineral Mission, Production Linked Incentive (PLI) Scheme, MMDR Act

For Mains: Strategic and Geopolitical Significance of Rare Earth Metals for India, Primary Challenges India Faces in Expanding Its Rare Earth Mining and Processing Industry

The recent agreement between Donald Trump and Xi Jinping underscores the strategic competition over rare earths, crucial for electric vehicles (EVs), renewable energy, and defence technologies. Despite India’s rich reserves and ongoing policy initiatives, persistent technological and infrastructural challenges hinder rapid self-reliance. Grasping these geoeconomic dynamics is essential for India’s ambition to challenge China’s dominance and emerge as a global leader in the era of clean energy, advanced electronics, and strategic autonomy.

What are Rare Earth Elements (REEs)? 

• About: The term Rare Earth Elements (REEs) refers to a set of 17 metallic elements: the 15 lanthanides plus Scandium (Sc) and Yttrium (Y), which share very similar chemical properties.
  • The lanthanides include: La (Lanthanum), Ce (Cerium), Pr (Praseodymium), Nd (Neodymium), Pm (Promethium), Sm (Samarium), Eu (Europium), Gd (Gadolinium), Tb (Terbium), Dy (Dysprosium), Ho (Holmium), Er (Erbium), Tm (Thulium), Yb (Ytterbium), Lu (Lutetium).
  • The phrase “rare earth” is somewhat misleading because these elements are relatively abundant in the Earth’s crust, but they are rarely found in economically viable concentrations or easy‐to-extract deposits.
• Unique Features:
  • Many REEs have strong magnetic, luminescent, or electrochemical properties.
    • For example, alloys of Nd (neodymium) and Sm (samarium) form powerful permanent magnets, able to operate at high temperatures.
  • Because of these characteristics, REEs are vital in modern technologies, including electronics, defence, medical devices, and clean energy systems.
  • Global Distribution:
  • According to data, countries such as China, Vietnam, and Brazil have very large REE reserves.
  • According to the US Geological Survey (USGS), China possesses around 44 million metric tons of rare earth oxide (REO) equivalent, accounting for approximately 48% of the world’s total reserves.
  •  India has about 6% of the world’s rare earth reserves but produces only around 1% of global output.
    • States like Kerala, Tamil Nadu, Odisha, Andhra Pradesh, and Gujarat have significant potential for mining and processing.

What is the Strategic Significance of Rare Earth Metals for India?

• Crucial for India’s Clean Energy Transition and Climate Goals: Rare earth elements (REEs) are indispensable for clean energy technologies, including permanent magnets used in wind turbines, catalysts in solar cells, and batteries in electric vehicles (EVs). 
  • India has emerged as a global clean energy leader, ranking 4th globally in Renewable Energy (RE) Installed Capacity, 3rd in solar, 4th in wind, and boasting the world’s fastest-growing renewable energy program.
  • The demand for rare earth magnets in sectors like wind energy and EVs is expected to nearly double by 2030, aligning with India’s net-zero emission target (2070). 
• Essential for National Defence and Strategic Autonomy: Rare earth metals are critical for advanced defence technologies such as missile guidance systems, communication devices, radar, and electronic warfare equipment. 
  • India currently relies heavily on imports, primarily from China, creating vulnerabilities.
  • Geopolitical tensions, trade restrictions, and global competition, especially from China, which controls 60% of global REE production and 85% of processing capacity, highlight the urgent need to develop a self-reliant supply chain to secure India’s clean energy goals, industrial growth, and national security.
  • By developing indigenous REE mining and processing capacity, India can enhance defence preparedness and reduce risks associated with supply disruptions, thus strengthening its strategic autonomy amidst geopolitical uncertainties..
• Boosting Economic Growth and Job Creation: India possesses the third-largest rare earth reserves globally (about 6.9 million tonnes), primarily in coastal regions (Kerala, Tamil Nadu, Odisha). 
  • With the Indian rare earth market valued at over USD 9 billion (2024) and expected to grow significantly, expanding rare earth mining and processing can unlock economic benefits. 
  • Government initiatives such as the Production-Linked Incentive (PLI) schemes for rare earth magnet manufacturing are expected to create significant employment opportunities, boost industrial growth, and reduce India’s dependence on imported rare earth-based products.
  • The National Critical Mineral Mission and related policies aim to expedite exploration and processing while balancing ecological norms, highlighting India’s need to overcome technical and regulatory hurdles to unlock resource potential.
• Supporting the ‘Make in India’ Vision Through Value Chain Development:  India’s current rare earth ecosystem is mainly upstream mining and extraction with limited downstream processing and magnet production. 
  • Major investments are underway to build full value chains, including magnet manufacturing plants in Visakhapatnam and integrated refining facilities in Kerala and Odisha. 
  • These efforts align with “Make in India” to promote domestic manufacturing of high-value rare earth products, reduce import dependency, and position India as a global supplier.
• Strategic Reserves and International Collaboration to Secure Supply:  India is actively developing strategic stockpiles of critical rare earth minerals to mitigate supply shocks. 
  • It is also pursuing partnerships with resource-rich countries and forming alliances like the Quad to diversify sources. 
  • Such geopolitical and trade strategies enhance India’s bargaining power, ensure material security, and hedge against supply disruptions caused by political instability or trade wars involving China.

What are the Primary Challenges India Faces in Expanding Its Rare Earth Mining and Processing Industry?

• Limited Domestic Production and Outdated Infrastructure: Although India holds the world’s third-largest rare earth oxide reserves (about 6.9 million tonnes) and nearly 35% of global beach sand mineral deposits, its actual production remains modest, with mine output at only around 2,900 metric tons per year — less than 1% of global supply. 
  • This disparity highlights the country’s outdated infrastructure and limited processing capacity, which hinder efficient extraction and value addition. 
  • Bridging the gap between reserves and production will require modernising facilities, upgrading technology, and expanding capacity to realise India’s full potential in the rare earth sector.
• Geopolitical and Supply Chain Vulnerabilities: India’s dependence on imports from geopolitically sensitive regions, particularly China, exposes its critical technology sectors to supply disruptions. 
  • The ongoing global competition for critical minerals exacerbates price volatility and availability risks. 
  • Recent Chinese export restrictions underscore this vulnerability and highlight India’s urgent need to develop indigenous refining, alloy manufacturing, and magnet production capabilities.
• High Capital Costs and Long Lead Times: Establishing integrated mining and processing infrastructure demands substantial investment. 
  
  • India’s plans to triple rare earth magnet manufacturing capacity by 2032 require hundreds of millions of dollars in capital and dedicated policy incentives. 
  • Such projects typically have long gestation periods, delaying immediate benefits and testing investor patience.
    • India’s rare earth ambitions are likely to face a gestation period of at least 15 years before achieving substantial self-reliance in exploration, processing, and manufacturing.
• Lack of Downstream Processing and Value Addition: India’s rare earth sector primarily focuses on mining and initial processing (like separation and oxide production). 
  • However, it has limited capabilities in producing intermediate products like alloys, permanent magnets, and finished components essential for advanced technology applications. 
  • This incompleteness weakens India’s position in the global value chain and necessitates large-scale capacity building.
• Environmental and Social Risks: Rare earth mining involves extracting minerals associated with radioactive elements like thorium, posing environmental and health hazards requiring stringent regulatory oversight.
  • Extracting rare earth minerals, especially from coastal monazite sands, risks ecological damage such as soil degradation and water contamination, potentially impacting local communities. 
  • The radioactive nature of some deposits requires safe waste disposal. 
  • Environmental clearances, Coastal Regulation Zone (CRZ) norms, and the need to conduct detailed impact assessments slow project approvals. 
  • Balancing ecological concerns with the economic imperative of rare earth mining remains challenging.

What Major Government Initiatives Have Been Undertaken by India to Develop and Secure the Rare Earth Materials Sector?

• National Critical Mineral Mission (NCMM),2025: Launched in January 2025 with a budget of ₹16,300 crore, the NCMM aims to ensure India’s long-term critical mineral security, including rare earth elements (REEs). 
• Production Linked Incentive (PLI) Scheme for Rare Earth Magnets: Announced in 2025, this scheme allocates ₹7,350 crore to incentivise domestic manufacturing of rare earth permanent magnets, vital for electric vehicles (EVs) and renewable energy technologies. 
  • The goal is to triple India’s magnet production capacity by 2030, reduce imports, and foster an integrated domestic supply chain.
• Strategic Stockpiling of Rare Earths and Critical Minerals: The government plans to create strategic mineral stockpiles to buffer supply shocks, especially given the concentration of rare earth supply in geopolitically sensitive countries like China. 
• Centres of Excellence (CoEs) and Research Ecosystem: Multiple Centres of Excellence have been established under NCMM in premier institutions like IISc Bengaluru and C-MET Hyderabad to drive R&D, innovation, patent development, and build local technological capabilities aligned with the global critical minerals challenge.
• Policy Reforms for Mining and Exploration: The government has simplified licensing, auctioned mining blocks (around 20 blocks), and introduced regulatory reforms to promote private sector participation in rare earths mining and downstream processing. 
  • Inclusion of critical minerals under Part D of the first schedule of the MMDR Act,1957 gives the Central Government control over leases, facilitating coordinated development.
• Recycling and Circular Economy Initiatives: In addition to mining, the government supports enhancing recycling of rare earths from electronic waste (e-waste) by approving incentive schemes and research programs focused on sustainable recovery, thereby reducing dependence on virgin mining and promoting a circular economy.

What Measures Should India Adopt to Effectively Strengthen Its Rare Earth Materials Ecosystem?

• Fully Implement and Scale up the National Critical Mineral Mission (NCMM): India should expedite the ambitious NCMM initiative to enhance mineral mapping, exploration of 1,200 critical mineral projects by 2030, and development of domestic processing capabilities. 
  • Rigorous implementation with strong policy coordination among ministries will help India extract value from its 6.9 million tonnes of rare earth reserves and improve its strategic autonomy. 
  • India may learn from global best practices like the US Department of Defence’s public-private partnership with MP Materials to build vertically integrated rare earth supply chains, backed by long-term procurement guarantees.
• Develop Strategic Integrated Rare Earth Manufacturing Clusters: Taking a cue from Australia’s cluster model, where mining and refining hubs exist with access to infrastructure and skilled labour, India should prioritise integrated hubs in Odisha (LREEs), Andhra Pradesh (HREEs), and Tamil Nadu (magnet manufacturing). 
  • This will reduce logistics costs, improve efficiency, and attract investment by creating economies of scale and specialised talent pools.
• Establish Strategic Stockpiles and Market Stabilization Mechanisms:Creating government-backed strategic reserves of rare earth minerals and instituting price floors or minimum procurement guarantees can stabilize supply and shield critical industries against price volatility. 
  • India may learn from the US Pentagon’s price floor and guaranteed offtake model in its rare earth magnet manufacturing program, enhancing market certainty and investor confidence.
• Substantially Expand Production Linked Incentive (PLI) Schemes for Rare Earth Magnets: India must increase PLI funding to nurture innovation hubs and scale magnet production to meet at least 15% of global demand by 2030, supporting electric vehicle (EV) and renewable energy sectors. 
  • India may learn from Australia's government-backed investments, including a $1.25 billion loan to Iluka Resources for building rare earth refineries, enhancing downstream production and exports.
• Invest Heavily in Research, Development, and Circular Economy Models:India must establish Centres of Excellence (CoEs) to develop green mining and eco-friendly extraction technologies. Recycling rare earths from e-waste, an emerging global best practice in Japan and South Korea, should be aggressively promoted to reduce virgin mining dependence. 
  • Encouraging startups, industry–academia collaboration, and innovation ecosystems can accelerate technology development and ensure a sustainable mineral economy.
• Harmonise Regulatory Framework and Enforce Environmental Safeguards:India should simplify mining and environmental clearances without compromising sustainability, especially in radiation-sensitive monazite extraction areas. 
  • Adopting rigorous environmental management, rehabilitation standards, and community engagement can prevent social conflicts and ensure responsible mining. 
  • Such balanced regulation can help India match the sustainability benchmarks seen in Scandinavian mining sectors.
• Forge Robust International Alliances and Technology Partnerships: India should deepen ties within frameworks like the Minerals Strategic Partnership (MSP) and the Quad to access advanced technology, co-invest in overseas deposits, and build diversified strategic supply chains. 
  • Following the US-Australia cooperative model, India can pursue bilateral MoUs to expand processing capabilities and reduce China-centric supply risks.

Conclusion: 

Nobel laureate Joseph Stiglitz rightly observes that the key question for developing economies is not merely “What can an economy produce today?” but rather “What can it learn to produce?”—a principle that should guide India’s strategic advancement in rare earths. To realise this vision, India must adopt a comprehensive rare earth strategy by swiftly operationalising the National Centre for Mineral Materials (NCMM), expanding PLI incentives, developing integrated industrial clusters, and streamlining regulations with robust environmental safeguards

Drishti Mains Question: 

Rare earth minerals have become indispensable to global tech and security frameworks. Critically examine India’s strategic interests and the challenges related to its rare earth sector

Frequently Asked Questions (FAQs)

1. What are Rare Earth Elements (REEs)?
REEs are a group of 17 metals (15 lanthanides plus Sc and Y) with unique magnetic, luminescent and electro-chemical properties essential for electronics, defence and clean-energy technologies.

2. Why are REEs strategically important for India?
REEs are critical for EVs, wind turbines, defence systems and India’s net-zero (2070) goals; developing domestic supply chains strengthens strategic autonomy and reduces dependence on China (which controls ~60% of production and ~85% processing).

3 . What major government initiatives target India’s rare-earth ambitions?
Key measures include the National Critical Mineral Mission (NCMM, ₹16,300 crore, 2025), a PLI scheme for rare-earth magnets (₹7,350 crore, 2025), strategic stockpiling, Centres of Excellence (IISc, C-MET) and mining policy reforms (Part D MMDR inclusion, block auctions).

4. What are the principal challenges facing India’s rare-earth sector?
Challenges include limited output (~2,900 t/year, <1% global), outdated infrastructure, lack of downstream processing (alloys/magnets), high capital/long gestation, and environmental/social risks from radiation-linked wastes and coastal mining.

5 . Which measures should India prioritise to build a resilient REE ecosystem?
Rapidly implement NCMM, expand PLI funding, create integrated manufacturing clusters (Odisha, Andhra, Tamil Nadu), invest in R&D and recycling, harmonise environmental clearances with strict safeguards, and establish strategic reserves and international technology partnerships.

                     

UPSC Civil Services Examination, Previous Year Questions (PYQs)

Prelims

Q. Recently, there has been a concern over the short supply of a group of elements called ‘rare earth metals’. Why? (2012)

1. China, which is the largest producer of these elements, has imposed some restrictions on their export. 

2. Other than China, Australia, Canada and Chile, these elements are not found in any country. 

3. Rare earth metals are essential for the manufacture of various kinds of electronic items and there is a growing demand for these elements. 

Which of the statements given above is/are correct? 

(a) 1 only 

(b) 2 and 3 only 

(c) 1 and 3 only 

(d) 1, 2 and 3 

Ans: (c)  

Q. Consider the following statements: (2021)

1. The Global Ocean Commission grants licences for seabed exploration and mining in international waters. 

2. India has received licences for seabed mineral exploration in international waters. 

3. ‘Rare earth minerals’ are present on the seafloor in international waters. 

Which of the statements given above are correct? 

(a) 1 and 2 only

(b) 2 and 3 only 

(c) 1 and 3 only 

(d) 1, 2 and 3 

Ans: (b)       

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Mains: 

Q. Despite India being one of the countries of Gondwanaland, its mining industry contributes much less to its Gross Domestic Product (GDP) in percentage. Discuss.(2021)