India’s newly announced $800 million Rare Earth strategy has arrived at the right moment—that of acute geopolitical and economic vulnerability.
Earlier in January, the Indian government had launched the National Critical Minerals Mission, with plans for large investments and regulatory reforms for Rare Earth Elements (REE) crucial to position India as a meaningful player in this strategically vital and fast evolving sector.
New Delhi’s real challenge now lies in converting ambition into time-bound, technically credible and internationally partnered modus operandi.
China’s imposition of export controls on seven rare earths and related magnets in April 2025 sent shock waves through the globe. India’s EV industry, which is overwhelmingly dependent on Chinese suppliers for magnets, saw an immediate hit. While Beijing has offered verbal assurances on these restrictions eventually being eased, no timeline has been given—and as of now, the controls remain in force. Every available metric—from EV production projections to renewable energy expansion to defence modernisation and digital infrastructure—indicates that global demand for rare earths and permanent magnets will only increase.
For an economy with India’s aspirations in both security and industrial capabilities and given our geopolitical tensions, diversifying the current dependence on REE and magnets is nothing short of existential.
Structural paradox
India holds the world’s fifth-largest rare-earth reserves—approximately 6.9 million metric tonnes. What it lacks is the capability to convert this into desirable industrial value in a globally competitive environment. At present, India does not possess commercial-scale facilities capable of refining, separating and/or processing the full spectrum of rare earth elements to high-purity levels required for manufacturing magnets. Even if mining volumes expanded tomorrow, we simply do not have the technical solutions or industrial scalability to process these elements domestically.
The new REE policy acknowledges this gap and promises major investment flows and simplification of regulatory frameworks. But without international partnerships in technology, expertise, and infrastructure, India risks repeating a decades-long pattern where strategic development looks impressive on paper but fails to deliver substantive results—the classic ‘over promise/under delivery’ situation.
India is also late to the race. Most advanced economies began strengthening their REE supply chains a decade ago. Closer home, the Indo-Pacific giants—Japan, South Korea and Taiwan—have already built diversified partnerships with developing countries such as Brazil and Vietnam, invested in recycling technology, formed industry consortiums and embedded their respective REE strategies into national industrial policies. Their mixed but meaningful results offer India a cluster of practical lessons for determining further course.
Before I turn to those lessons, it is important to understand the technical side of the rare earth challenge.
Rare earth elements are often equated with “critical minerals”, but they are a distinct subset of 17 elements, classified as light, medium and heavy. Light REEs like lanthanum and neodymium are common and vital for EV motors and magnets. Medium REEs such as samarium and dysprosium support high-temperature applications, while heavy REEs like holmium, yttrium and lutetium are scarce, costly and essential for advanced defence and semiconductor systems. Their unique magnetic strength, thermal stability and catalytic properties—because of unpaired electrons—make them indispensable across modern technologies. REEs are not geologically rare, but occur in dispersed forms, making processing capital-intensive, polluting and complex.
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China dependency
Rare earth deposits exist across the world, but China dominates the chain with 44 million tonnes of REE reserves (48 per cent of global exploitable reserves) and 69.2 per cent of global output. The United States, by contrast, has 1.9 million tonnes.
What sets China apart is not just the quantity of the reserves but four decades of deliberate industrial strategy giving it an advantage others missed.
The strategic value of REEs emerged during the Cold War when US military research in the 1960s developed samarium-cobalt magnets for radar systems and yttrium-aluminium-garnet lasers for missile guidance. While the US pioneered early technology, China built the supply chain at a much cheaper price.
Deng Xiaoping had famously said, “The Middle East has oil; China has rare earths.” From the 1980s, China directed state subsidies, relaxed environmental regulations and put humongous investments into extraction, separation and magnet-making technologies. Between 1990 and 2000, China produced 73,000 metric tonnes of REEs and expanded output by 450 per cent as other countries curtailed their own production by 60 per cent due to cost and environmental concerns. By 2009, China controlled 98 per cent of global mine production; by 2010, 97 per cent of global supply. Currently it dominates 60-70 per cent of mining and over 90 per cent of supply.
To complicate things further, heavy REEs, which are more difficult to extract and far less abundant, are concentrated almost exclusively in China—an unparalleled leverage.
The first major weaponisation of REE by China occurred in 2010, when it halted REE exports to Japan after the Senkaku maritime incident. Prices for several elements skyrocketed by up to 500 per cent, forcing Tokyo to re-calibrate its entire supply chain strategy, a turning point that fundamentally reshaped Japan’s industrial policy.
More recently, following the sharp escalation of US–China trade tensions in 2025, triggered by Trump’s tariff wave, Beijing retaliated by tightening exports of seven REEs and magnets made with them.
Also read: America gifted China its rare-earth monopoly — and India helped too
Lessons for India
To assess India’s evolving strategy meaningfully, one must situate it against how other economies have adapted to China’s dominance.
Japan
Shocked by China’s 2010 incident, Japan moved with speed and sound strategy. Within months, Tokyo approved a 100-billion-yen ($1.2 billion) supplemental budget dedicated to rare earth security. Over the next decade, Japan was able to cut its dependence on China from 90 per cent to approximately 60 per cent. It built domestic expertise in high-end magnet manufacturing, invested in cutting-edge research on alternative materials and expanded recycling and developed global partnerships
Japan’s experience is now regarded as one of the most consequential shifts in global critical mineral security. It shows that clear industrial policy, backed by sustained investment can re-shape global supply chains.
South Korea
South Korea has also moved in time. Recognising its vulnerability in both REEs and magnets, it forged strong partnerships with Vietnam and other ASEAN countries beginning in 2025. With Vietnam, cooperation on neodymium extraction and magnet production is particularly advanced. Beyond mining, Seoul is developing recycling technologies and working closely with Southeast Asian players to create a region-wide circular model for rare earth recovery.
Taiwan
For Taiwan, whose advanced semiconductor industry consumes large quantities of REEs, the dependency risk on China, geopolitical crisis notwithstanding, was existential. Since 2002, Taiwan has promoted sustainable REE use and recycling infrastructure. Today, Taiwan’s strategy rests on four pillars.
First, Geopolitical diversification. Majority of Taiwan’s REE imports now come from Europe, US and Japan, marking a shift away from China.
Second, technological innovation in recycling. Taiwan is a global pioneer in “urban mining” which means extracting REEs from electronic waste. Companies like Lianyou Metals now produce battery-grade cobalt sulfate and sodium tungstate successfully.
Third, Strategic international partnerships. This includes a 10-year agreement linking Taiwan, France and Brazil. French firm Carester SAS, supported by Taiwanese and Japanese partners, is helping Brazil extract heavy REEs such as dysprosium and terbium, while Brazil benefits from value-added technical capacity and emerges as a regional leader in its own theatre.
Fouth, related to the above, Consortium-based innovation ecosystems. These ensure that research breakthroughs translate quickly into commercial capabilities built on best practices and expanded footprint.
Also read: India’s EV dreams need freedom from China’s stranglehold on rare-earth metals. Start mining
India’s window
India has shown potential interest in partnerships with Japanese and South Korean companies. In August this year, several media outlets reported that state-owned IREL sought collaboration not just in magnet production but also in overseas mining projects across Argentina, Australia, Malawi and Myanmar.
These are promising directions but promises alone do not deliver supply chains.
To capitalise on its vast reserves and demands of a growing economy India must pursue a blend of the following.
(i) Time-bound implementation, not open-ended intentions.
(ii) Clarity on industrial sequencing—from mining to separation, refining and magnet fabrication.
(iii) Credible international partnerships leveraging the strengths of all included, which will not be achieved with just promising bilateral talks.
(iv) R&D pathways aligned with global innovation in recycling, substitutes and efficiency.
(v) Environmentally responsible extraction techniques to draw more responsible stakeholders.
Like other advanced Indo-Pacific economies, the key lesson is that no country has built REE resilience alone. Consortiums involving governments, industries and research institutions—often spanning continents—are the new norm. The Carester–France–Brazil–Taiwan arrangement, Japanese partnerships across Africa and Southeast Asia, and Korean-Vietnamese ventures illustrate how the race for REE security is accelerating, powered by both geopolitical tension and industrial strategy.
A working paper from the Harvard Business School on rare earth policy—Trade and Industrial Policy in Supply Chains: Directed Technological Change in Rare Earths—adds an important insight. It says China’s export restrictions, though painful, “led to a global surge in innovation”. The shock generated research on substitute materials, better recycling, and new processing techniques. The fittest survived by adaptation, led by timely innovation.
Swasti Rao is a Consulting Editor (International and Strategic Affairs) at ThePrint. She tweets @swasrao. Views are personal.
(Edited by Theres Sudeep)