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Author | Yuan Jirong
Editor | He Jiawei
Reviewer | Jiang Yi
Editor's Note
The Times of India recently claimed that, in order to reduce dependence on China, India, which ranks third in rare earth reserves in the world, will invest between 35 billion and 50 billion rupees (100 rupees is approximately 8.4 yuan RMB) to launch an indigenous rare earth production expansion plan. Analysts believe that India has the potential to become an important rare earth supplier outside of China. However, to achieve this goal, India must invest more funds and accelerate breakthroughs in the mining and processing technology of key minerals. The South Asia Research Communication specially reprints this article for the reference of all readers.
India's electric vehicle industry heavily relies on Chinese rare earths, as seen in the image of Tata, an Indian automobile manufacturer, showcasing an electric vehicle on June 3. Source: AFP.
One, India Launches the "National Critical Minerals Mission" Plan
According to Reuters on June 27, the Indian government stated in its latest May economic report that it is taking measures to address possible supply disruptions caused by China's restrictions on rare earth minerals. The report said that although India has one of the world's top rare earth reserves, its related industrial chain is not well developed. Currently, China produces about 90% of the world's rare earth magnets. In April 2025, China implemented export control measures on rare earth-related items, affecting India's automotive manufacturing industry. The Economic Times of India stated that Indian state-owned enterprises have been mining rare earth materials for many years, but these materials are mainly used in atomic energy and defense departments, and most other uses of rare earths are still imported from China.
A source with knowledge of the situation told Reuters early in July that India is planning to provide incentives to domestic companies to establish rare earth processing and magnet production facilities to meet local demand. In January 2025, the Indian government launched the "National Critical Minerals Mission" plan aimed at strengthening domestic rare earth supply.
According to a Reuters report on June 30, India's largest rare earth magnet importer, Sona Comstar, became the first company to respond to the government's policies, planning to produce magnets containing various key rare earth materials in India. The CEO of Sona Comstar told Reuters, "As the world's largest importer of rare earth magnets, we must focus on self-sufficiency in magnets in India. The company is cooperating with the government." In the fiscal year 2024-2025, Sona Comstar imported approximately 120 tons of magnets from China for Tesla, the US electric vehicle giant, and Stellantis, a multinational automaker from Europe and the US. The company originally planned to import 200 tons of magnets in 2025 to meet the growing needs of its electric vehicle customers. The US market currently accounts for about 40% of Sona Comstar's revenue, and to achieve future growth, the company is also considering expanding into the Asian market. However, the Reuters report emphasized that any plans for mining and processing rare earths "will take several years to develop," so Indian companies cannot provide an immediate solution to reduce their reliance on Chinese rare earths.
Recently, CNBC cited the statement of India's Minister of Commerce and Industry, Goel, saying that India is actively developing rare earth resources and may become an alternative to China's rare earths. According to data from the US Geological Survey, India also has considerable rare earth reserves. Paskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, said that India has completed multiple domestic rare earth element projects, including factories led by India Rare Earths Limited. She analyzed, "Although India cannot replace China's position in the global rare earth market, it can play an important role in providing new rare earth resources."
The G7 reached a consensus on critical mineral supplies at the summit that ended in June, planning to cooperate with allied countries, including India, to diversify critical mineral supplies and reduce reliance on China. According to a report by Canada's Financial Post, this strategy will include increased investment, partnerships, and infrastructure, including the creation of "economic corridors" in emerging markets to increase the supply and access of critical minerals.
Qian Feng, a researcher at the National Strategy Institute of Tsinghua University, told Global Times reporter that India has accelerated its rare earth strategy in recent years, with the core goal of enhancing its "risk reduction" capability in the critical mineral supply chain, achieving self-sufficiency in critical minerals, and intentionally breaking China's dominant position in the global rare earth supply chain, ultimately becoming a country with greater influence in the global value chain. For this purpose, the Modi government has started to work both domestically and internationally. Domestically, the Indian government is actively using policy guidance to explore the potential of local mineral development. It approved the "National Critical Minerals Mission" plan, opened up rare earth exploration licenses to private enterprises, promoted the participation of the private sector in rare earth mining, expanded exploration areas, strengthened environmental protection technology research and development for rare earth mining, and tapped into the development potential of 20 rare earth mines in the country. Internationally, the Indian government is actively expanding its "international friends circle" for critical minerals. It has signed mineral agreements with multiple countries in Africa and Latin America, increased investments in key countries in the "Global South", and strengthened cooperation with Japan and Australia in aspects such as processing, refining, and recycling under the framework of the "Mineral Security Partnership" led by the United States.
Two, Three Bottlenecks
According to CNBC, despite having the world's third-largest rare earth reserves, India's exploration volume is less than 20%. Arun Misra, CEO of India Zinc Company and Executive Director of Vedanta, stated that India has abundant sources of rare earth magnets, but regulatory and refining technologies hinder the development of the rare earth industry. Misra analyzed that India needs to make significant investments in smelting technology and R&D because some key technologies are currently only mastered by China and Japan. Recently, analysts quoted by Reuters said that India lacks large-scale rare earth mining technology and infrastructure, and any commercially viable domestic supply chain development would still take several years.
Recently, India's domestic critical rare earth supply chain has tightened, and its ambition to expand external supply is being questioned. A report by "India Wealth" website at the end of June stated that the country's largest automaker, Maruti Suzuki, became the focus of news due to its decision to cut its electric vehicle production targets, the reason being a shortage of components dependent on rare earth production.
India Rare Earths Company extracts rare earth elements from beach sand. Source: AFP.
The Mint quoted Bhatia, president of JATO Dynamics India, a car market intelligence and analysis company, stating that the outlook for India's automotive industry is not optimistic. Bhatia predicted that the production of many models might be delayed by 2 to 6 months, and prices could also rise by 5% to 8%. This means that an electric vehicle priced at 160,000 rupees could see an increase of 8,000 to 13,000 rupees. Even for fuel vehicles, rare earth magnets are needed to drive engine components.
According to Bhatia's analysis, the cost of developing a new mine ranges from 40 billion to 80 billion rupees and requires a preparation period of up to ten years. "In this field, the policy support provided by China is incomparable to that of India, the United States or Europe." Gupta, CEO and co-founder of Attero Recycling, said, "You can go to Australia or Canada to find new partners, but they just give higher prices." An Indian graphite merchant said that many locally produced graphite products are not adopted by Indian equipment manufacturers, who prefer to directly purchase from China. China has a larger scale of graphite production and the lowest price.
Qian Feng told Global Times reporter that although India has ambitious goals, its rare earth strategy implementation faces three bottlenecks. First, there are technical shortcomings, lacking advanced separation and refining technology, unstable product quality, and difficult to meet the needs of domestic high-tech industries; second, among the 6.9 million tons of rare earth reserves confirmed in India, the main distribution is along the eastern and southern beaches, with low grade, complex extraction process, and restricted environmental factors, leading to high production costs and lack of international market competitiveness; third, India lacks a complete industrial chain from mining to terminal applications, and has a shortage of technical talent and unstable power supply, which are major constraints for large-scale production.
Qian Feng said that the prospects of India's rare earth strategy depend on whether it can break through the three bottlenecks of technology, cost, and industrial chain. In the short term, India's rare earth output accounts for less than 1% of the world and is costly, making it difficult to threaten China's dominant position. In the medium to long term, if India continues to break through technological bottlenecks through its own R&D and international cooperation, increases investment, promotes industrial upgrading, and significantly reduces production costs, it may take over some of the mid-to-low-end rare earth processing demands, diverting part of the current international mid-to-low-end market. However, shaking China's "resource + technology + market" comprehensive advantage and forming a so-called "market replacement" is no easy task.
Three, Eyes on Africa, South America and Australia
To overcome the bottleneck of mineral refining technology and expand the upstream and downstream of the industrial chain, India has invested a lot of human and material resources in recent years. Since 2023, India has accelerated the construction of a local supply chain for rare earths and other critical minerals.
In June 2023, the Indian Ministry of Mines announced the establishment of a "Center of Excellence for Critical Minerals" as the core technical support platform for the critical minerals strategy. The center aims to integrate India's mineral resource data, form a dynamic monitoring mechanism, and plan to update the list of critical minerals every three years. In terms of investment and construction of R&D clusters, India has established three R&D hubs in Bangalore, Hyderabad, and Bhopal, focusing on lithium ion direct extraction and rare earth bio-hydrometallurgy technology.
In March 2025, the Indian Ministry of Mines launched the auction of 13 critical mineral blocks, marking the first time that private enterprises in India are allowed to obtain 50-year exploration revenue rights through bidding, breaking the previous monopoly of state-owned enterprises. India is also building a domestic rare earth recycling industry chain. The Indian government has abolished import tariffs on 12 types of key mineral waste, aiming to increase the recycling rate of rare earths from electronic waste from 12% to 35%, thus bringing more rare earth raw materials into the circular economy.
Information disclosed by Ernst & Young's website shows that according to the "National Critical Minerals Mission" plan, the Indian Geological Survey is tasked with conducting 1,200 exploration projects during the fiscal years 2025 to 2031. To reduce reliance on rare earth elements, the Indian Atomic Energy Mineral Exploration and Research Institute is conducting exploration work along coastal, inland, and river sand mines in the country.
At the same time, India has extended its hand to the Pacific Ocean far from its territory. In July 2024, India submitted an application for exploration in the Clarion-Clipperton Zone (Pacific) to the International Seabed Authority. This area is located in the high seas between Mexico and Hawaii, and the goal is to complete a feasibility study on commercial mining of polymetallic nodules by 2026. According to the U.S. Geological Survey, the nickel, cobalt, and manganese content in this area exceeds the total of all land reserves, with an estimated cobalt reserve of 2.8 million tons and nickel of 160 million tons, which can support India's electric vehicle industry for decades. In November 2024, India introduced a U.S. robotic mining patent and collaborated with Japan to conduct ecological assessments of rare earth-rich areas on the seabed.
India has also turned its attention to key mineral resources in Africa, South America, and Australia. In September 2024, India launched a joint key mineral exploration and production project with Malawi, led by an Indian state-owned mining company, aiming to form a rare earth oxide capacity of 5,000 tons per year by 2028. In January 2025, India signed a Memorandum of Understanding on joint development of lithium resources with Chile, obtaining exploration rights in the core area of the "Lithium Triangle" - the Atacama Salt Lake in Chile, and配套建设Antofagasta Port dedicated logistics channels. Later, it was reported that four Indian state-owned enterprises are negotiating with SQM, the world's second-largest lithium producer, to acquire a 20% stake in two lithium mine projects in Western Australia, Mount Holland and Andover, for about 600 million dollars.
Source: Global Times
This article is reprinted from the WeChat public account "Huan Shi Finance" on July 2, 2025, titled "Competing with China? India Faces 'Three Mountains'". The original article was published on July 2, 2025, in the Global Times, titled "Striving for Comprehensive Self-Sufficiency, Can India's Rare Earths 'Sell Globally'?"
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