New Delhi: India has initiated diplomatic discussions with China to address concerns over the supply of rare earth magnets, critical components for industries like automotive, defense, and clean energy, as Beijing imposed stringent export restrictions in April 2025. This marks the first official acknowledgment by the Indian government of engaging China on this issue, highlighting the strategic importance of rare earth elements (REEs) amid global supply chain disruptions. As China controls over 90% of the global processing capacity for rare earth magnets, India’s proactive outreach underscores its efforts to secure a stable supply chain and reduce dependency on Chinese imports.
What Are Rare Earth Elements (REEs)?
Rare earth elements (REEs) comprise 17 metals, including the lanthanides (elements 57 to 71 on the periodic table), scandium, and yttrium. These elements are classified as critical minerals due to their rarity in economically exploitable concentrations, limited global suppliers, and strategic importance across various sectors. REEs possess unique properties, such as high remanence and coercivity in magnets, attributed to their atomic structure with a relatively large number of unpaired electrons. These properties make REE magnets exceptionally powerful, enhancing efficiency in energy storage, electronics, and advanced manufacturing. They are indispensable in applications ranging from aerospace and defense to automotive and renewable energy systems, powering devices like cellular telephones, computer hard drives, guidance systems, lasers, radar, sonar, wind turbines, and electric vehicle (EV) motors.
Global Reserves and China’s Dominance
China holds the largest reserves of REEs globally, with an estimated 44 million metric tons, accounting for 38% of proven reserves, according to the Statistical Review of World Energy (2024). Brazil follows with 21 million metric tons (18%), while India ranks fifth with approximately 6.9 million metric tons. Other notable reserves include Australia (5.7 million metric tons), Russia (3.8 million metric tons), and Vietnam (3.5 million metric tons). Despite its significant reserves, India’s limited processing capacity has made it heavily reliant on imports, particularly from China, which dominates global REE production (240 kilotons out of 356 kilotons in 2023, or 67%) and exports (64% of global export value and 86% of quantity in 2023). Chinese REE exports grew at a compound annual growth rate (CAGR) of 11.6% from 2018 to 2023, with Japan (85% of export value), South Korea (3.5%), and the USA (3.2%) being primary destinations.
China’s Export Restrictions and Global Impact
In April 2025, China introduced export restrictions requiring companies to obtain import permits from Beijing, a move widely seen as a retaliation to US President Donald Trump’s reciprocal tariffs announced on April 2, 2025. Two days later, China imposed a 34% tariff on all US imports and tightened REE export controls, leading to a sharp decline in rare earth magnet exports in May 2025. These restrictions have caused confusion at ports, delaying shipments of both high-performance and low-end magnets, impacting global car manufacturers, clean energy sectors, and home appliance industries. The Society of Indian Automobile Manufacturers (SIAM) has urged the Indian government to intervene, as India’s auto sector imported 460 tons of rare earth magnets, mostly from China, in the fiscal year ending March 31, 2025, with projections to import 700 tons worth $30 million this year.
India’s Diplomatic Engagement with China
On June 26, 2025, the Indian Ministry of External Affairs (MEA) confirmed ongoing discussions with China to streamline the rare earth magnet supply chain. MEA spokesperson Randhir Jaiswal stated, “We have been in touch with the Chinese side both in Delhi and Beijing, and we are talking to them as to how we can streamline the supply chain issue on rare earths.” These talks occur against the backdrop of efforts to normalize India-China relations following a six-year border standoff. The engagement reflects India’s broader strategy to address trade and economic issues with China, particularly as industries like automotive and clean energy face supply chain vulnerabilities due to Beijing’s export curbs.
India’s Auto Sector and Rare Earth Dependency
Rare earth magnets are critical for India’s automotive industry, used in electric vehicle motors, power windows, and audio speakers in both electric and conventional vehicles. The reliance on Chinese imports has made India vulnerable to supply disruptions, prompting industry bodies to escalate the issue to the Commerce Ministry. The projected import of 700 tons of rare earth magnets in 2025 underscores the sector’s growing demand, driven by the global transition to clean energy and electric vehicles. The International Energy Agency (IEA) estimates that global REE demand reached 93 kilotons in 2024, with 18% used in clean technologies. By 2050, demand is projected to soar to 180-202 kilotons, with clean technology usage rising to 32-39%.
Geopolitical Risks and Energy Security
The concentrated REE market, dominated by China, poses significant geopolitical risks. The 2010 incident, where China restricted REE exports to Japan over a maritime dispute, led to a 39% decline in Japan’s REE imports from 2010 to 2012, causing price spikes and industrial disruptions. This prompted Japan, the USA, and the EU to challenge China at the World Trade Organization (WTO), which ruled against China’s restrictions. The episode highlighted the need for diversified supply chains to mitigate energy security risks, especially as countries shift from fossil fuel dependency to reliance on critical minerals for low-carbon technologies. Elements like lithium, nickel, cobalt, dysprosium, neodymium, tellurium, indium, and gallium are vital for lithium-ion batteries, wind turbines, and photovoltaic cells, amplifying the strategic importance of REEs.
India’s Strategy to Reduce REE Dependency
India is adopting a multi-pronged approach to reduce its reliance on Chinese REEs, focusing on recycling, research and development (R&D), and diversifying import sources. The Ministry of Mines has launched a Production Linked Incentives scheme to promote critical mineral recycling, addressing the water- and energy-intensive nature of the process. Indian Rare Earths Limited (IREL), established in 1950, plays a pivotal role in REE extraction, processing, and R&D. The USA’s recent removal of IREL from its export control list is expected to bolster India’s critical mineral supply chain. Additionally, IREL’s Rare Earth Permanent Magnet Plant (REPM) in Visakhapatnam, with a 3,000 kg annual capacity for samarium-cobalt magnets using indigenous technology, marks a significant step toward self-reliance.
India is also exploring strategic partnerships to diversify imports. Kazakhstan, with rich reserves of 15 out of 17 REEs and established extraction capabilities, offers a promising alternative due to its geographical proximity and geopolitical stability. India’s defense cooperation and civil nuclear agreements with Kazakhstan, coupled with its role as India’s largest trading partner in Central Asia, make it an ideal partner. The India-Central Asia Rare Earths Forum (ICAREF) is facilitating collaborations for joint mining ventures, aiming to create a regional REE market to reduce dependence on China. India’s inclusion in the US-led Mineral Security Partnership and amendments to the Mines and Minerals (Development and Regulation) Act further support these efforts.
The National Critical Mineral Mission (NCMM)
Launched in 2025, the National Critical Mineral Mission (NCMM) aims to enhance the exploration and processing of critical minerals, including REEs. By fostering domestic capabilities, the NCMM seeks to address India’s limited processing capacity, which has historically forced reliance on Chinese imports. The mission aligns with global trends, as countries race to secure critical minerals for the green energy transition. Khanij Bidesh India Ltd (KABIL) complements these efforts by exploring international partnerships to secure critical mineral supplies, further reducing India’s vulnerability to global supply chain disruptions.
Challenges and Opportunities
While India’s strategies are promising, challenges remain. Recycling REEs is resource-intensive, requiring robust e-waste collection systems. R&D for alternative materials or improved REE utilization is costly and time-consuming, with uncertain outcomes. Diversifying import sources is complicated by geopolitical factors and limited global suppliers. However, opportunities abound, particularly through partnerships with countries like Kazakhstan and investments in domestic processing infrastructure. The IEA’s projection of rising REE demand underscores the urgency of these efforts, as clean energy technologies drive global consumption.
Conclusion
India’s engagement with China on rare earth magnet supply reflects its proactive approach to securing critical minerals amid global supply chain challenges. By leveraging diplomacy, domestic initiatives like the NCMM and IREL’s REPM plant, and strategic partnerships with countries like Kazakhstan, India is steadily reducing its dependency on Chinese REEs. As the world transitions to clean energy, the strategic importance of REEs will only grow, making India’s multifaceted strategy a critical step toward energy security and industrial resilience. With continued investment in recycling, R&D, and international collaborations, India is poised to strengthen its position in the global critical minerals landscape, ensuring a sustainable and secure future for its industries.
Frequently Asked Questions (FAQs)
1. What are Rare Earth Elements (REEs) and why are they important?
Rare Earth Elements (REEs) are a group of 17 metals, including the lanthanides (elements 57-71), scandium, and yttrium, classified as critical minerals due to their scarcity in economically viable concentrations and strategic importance. They are vital for industries like aerospace, defense, automotive, and clean energy, powering applications such as electric vehicle motors, wind turbines, computer hard drives, lasers, and radar systems. REEs’ unique properties, like high remanence and coercivity in magnets, enhance efficiency in electronics, energy storage, and advanced manufacturing, making them essential for the global green energy transition.
2. Why has China imposed export restrictions on rare earth magnets, and how does this impact India?
In April 2025, China introduced export restrictions requiring import permits from Beijing, likely as a response to US President Donald Trump’s reciprocal tariffs announced on April 2, 2025. China, controlling over 90% of global REE processing capacity, saw a sharp decline in magnet exports in May 2025, causing delays and confusion at ports. India’s auto sector, which imported 460 tons of rare earth magnets from China in the fiscal year ending March 31, 2025, and expects to import 700 tons worth $30 million this year, faces supply chain disruptions, impacting electric vehicle production and other automotive components like power windows and audio speakers.
3. How is India addressing its dependency on Chinese rare earth magnet imports?
India is adopting a multi-pronged strategy to reduce reliance on Chinese REEs. The National Critical Mineral Mission (NCMM), launched in 2025, promotes domestic exploration and processing of critical minerals. Indian Rare Earths Limited (IREL) has established a Rare Earth Permanent Magnet Plant in Visakhapatnam to produce samarium-cobalt magnets using indigenous technology. India is also exploring recycling through a Production Linked Incentives scheme, investing in R&D for alternative materials, and diversifying import sources, particularly through partnerships with Kazakhstan via the India-Central Asia Rare Earths Forum (ICAREF). Additionally, India’s inclusion in the US-led Mineral Security Partnership strengthens its global supply chain.
4. What diplomatic efforts has India made to address the rare earth magnet supply issue with China?
On June 26, 2025, the Indian Ministry of External Affairs confirmed ongoing discussions with China in both Delhi and Beijing to streamline the rare earth magnet supply chain. This marks the first official acknowledgment of such talks, which occur amid efforts to normalize India-China relations after a six-year border standoff. The dialogue aims to address trade and economic issues, ensuring a stable supply of REEs critical for India’s automotive and clean energy sectors.
5. What are the global reserves of rare earth elements, and where does India stand?
According to the Statistical Review of World Energy (2024), China holds the largest REE reserves at 44 million metric tons (38% of global reserves), followed by Brazil with 21 million metric tons (18%). India ranks fifth with approximately 6.9 million metric tons. Other notable reserves include Australia (5.7 million metric tons), Russia (3.8 million metric tons), and Vietnam (3.5 million metric tons). Despite its reserves, India’s limited processing capacity makes it reliant on imports, primarily from China, which accounts for 81% of India’s REE import value and 90% of quantity in 2022.
