Highlights
- India is actively working to reduce its 90% import dependence on China for rare earth elements through:
- Recycling
- Domestic production
- International partnerships
- India lacks midstream processing capabilities and has minimal rare earth magnet production compared to China’s global dominance.
- Current REE strategy remains largely aspirational, with:
- Small-scale production
- Significant technological gaps to overcome in achieving true supply chain independence
India is intensifying its efforts to reduce its reliance on China for rare earth elements (REEs), unveiling a multifaceted strategy that encompasses recycling, domestic production, regional partnerships, and research. But a deeper look reveals that while ambitions are expanding, structural and technological gaps remain, and China’s grip on the midstream still casts a long shadow.
Diversification on Paper
According to a new report by Eco-Business and analysis by Saswata Chaudhury (opens in a new tab) of The Energy and Resources Institute (opens in a new tab), India is pursuing a three-pronged approach to reduce its 90% import dependence on China for REEs as summarized in the table below:
| Focus | Summary |
|---|---|
| Recycling | A proposed Production Linked Incentives (PLI) scheme aims to encourage the recovery of REEs from e-waste. |
| Domestic Development | State-owned Indian Rare Earths Limited (opens in a new tab) (IREL) is spearheading REE extraction and has commissioned a new rare earth permanent magnet (REPM) plant in Visakhapatnam with a modest annual capacity of 3,000 kg. |
| International Partnerships | India is engaging Kazakhstan—rich in 15 of 17 REEs—for potential supply agreements and private-sector-led mining joint ventures. |
These efforts are bolstered by India’s participation in the U.S.-led Mineral Security Partnership (MSP), amendments to its Mines and Minerals Act, and removal of export controls on IREL by the U.S.
What follows is a breakdown of what appears to be working.
First Rare Earth Exchanges (REEx) reports on policy alignment — that is, India’s inclusion in global alliances like the MSP and proactive legislative changes signal a growing seriousness about resource security. The nation has promulgated a strategic vision for the future. The formation of ICAREF (India-Central Asia Rare Earths Forum) reflects India’s intent to establish a regional REE ecosystem that can reduce its exposure to Chinese dominance. Finally, the nation is investing in public sector research and development. In other words, the indigenous development of samarium-cobalt magnets at IREL is a symbolic yet tangible first step toward closing the downstream capability gap.
But REEx suggests gaps in the Indian program. Despite growing momentum, India’s push for rare earths lacks the industrial depth and scale necessary to alter the global supply map truly. The list remains substantial, and international investors involved in rare earth supply chain activity should be aware of this.
But REEx suggests gaps in the Indian program. Despite growing momentum, India’s push for rare earths lacks the industrial depth and scale necessary to alter the global supply map significantly. The list remains substantial, and international investors involved in rare earth supply chain activity should be aware of this.
| Missing Elements/Issues | Summary |
|---|---|
| Midstream Processing Is Still Missing | Like the U.S., India can mine REEs but struggles to separate, refine, and fabricate them into usable products. No domestic separation facilities for high-purity REOs have been announced. |
| Recycling Reality | While the PLI plan sounds promising, India lacks a nationwide infrastructure for systematic e-waste collection and REE extraction. Recycling remains energy- and water-intensive, with limited commercial viability at scale. |
| Small Output, High Ambition | The new REPM plant’s 3,000 kg/year capacity is a start—but it’s dwarfed by the global demand for permanent magnets in EVs, wind turbines, and defense. By comparison, China produces over 160,000 tons of REE magnets annually. |
| No Heavy REE Strategy | India’s current efforts focus on light REEs (like lanthanum, cerium, samarium), but high-value heavy REEs like dysprosium and terbium—essential for high-temperature magnets—are not yet addressed. |
| Dependence on Kazakhstan Could Replace One Risk With Another | While Kazakhstan offers promise, it has its own logistical and political limitations. No formalized offtake or processing agreements have been announced. |
Geopolitical Context
China continues to dominate the rare earth element (REE) market, producing two-thirds of global REEs and controlling 85% of the mine-to-metal capacity. As Chaudhury notes, past disruptions—like China’s 2010 export halt to Japan—prove that overreliance on a single supplier carries systemic risk. In 2023, 81% of India’s REE import value and 90% of its volume came from China. While Indian imports have grown at 10% CAGR, China’s supply share has remained entrenched.
Retail Investor Takeaway
India’s upstream ambitions and regional outreach are noteworthy, but investors should temper expectations. The country is still in early development phases, lacks midstream infrastructure, and has yet to secure industrial-scale international partnerships. Unlike Australia or the U.S., India has no publicly traded rare earth element (REE) firms with scaled production or downstream integration.
Until India develops commercial-scale separation and magnet-making capacity, its exposure to Chinese rare earth elements (REEs)—and the investment thesis surrounding Indian REE independence—remains largely aspirational.
Rare Earth Exchanges: Intelligence for Rare Earth Element Supply Chain Retail Investors—see the Forum (opens in a new tab)
Leave a Reply