New Delhi : Introduction to India’s Rare Earth Reserves
India holds a significant 8% of the world’s Rare Earth Element (REE) reserves, positioning it as the third-largest holder globally, behind China (49%) and Brazil (23%), according to a comprehensive CareEdge report released on July 8, 2025. Despite this substantial endowment, India contributes less than 1% to global REE mining, a stark contrast to China’s dominant 69% share in mining and 90% in refining. With global supply chains evolving and China’s dominance projected to decline, India is poised to play a pivotal role in the rare earth sector, particularly as geopolitical tensions and export restrictions reshape the market.
Rare Earth Elements, a group of 17 strategically vital minerals, are critical for high-tech applications in clean energy, automotive, and defense sectors. These include Light Rare Earth Elements (LREEs) like neodymium (Nd) and praseodymium (Pr), essential for electric vehicle (EV) motors and wind turbines, and Heavy Rare Earth Elements (HREEs) such as dysprosium (Dy) and terbium (Tb), crucial for military-grade magnets and high-performance electronics. This article explores India’s untapped potential, the challenges it faces, and the strategic initiatives underway to bolster its position in the global REE supply chain.
India’s REE Reserves and Distribution
India’s REE reserves, estimated at 6.9 million tonnes by the U.S. Geological Survey, are primarily found in monazite sands, which contain thorium, a radioactive element. The 2023 Indian Minerals Yearbook identifies 130 REE deposits, predominantly located in coastal states such as Tamil Nadu, Kerala, Andhra Pradesh, and Odisha, with smaller reserves in Jharkhand, Gujarat, and Maharashtra. These coastal regions also account for approximately 35% of the world’s beach and sand mineral deposits, as per an EY report, making them a critical resource for India’s REE ambitions.
The concentration of REEs in monazite sands presents both opportunities and challenges. While the reserves are substantial, their radioactive nature complicates extraction, making the process lengthy, complex, and costly. Additionally, India’s REE deposits primarily contain LREEs, with HREEs not available in extractable quantities, limiting the country’s ability to produce high-value products like military-grade magnets.
Why India Lags in REE Mining and Refining
Despite its significant reserves, India’s contribution to global REE production remains minimal, with an annual output of just 2,900 tonnes from 2012 to 2024, according to Statista. Several factors contribute to this gap:
- Complex Extraction Process: The radioactive nature of monazite sands requires specialized handling, increasing the cost and complexity of extraction. This has deterred large-scale mining operations.
- Incomplete Industrial Value Chain: India has facilities for mining, separating, and refining REEs into oxides and can extract metals. However, it lacks the infrastructure to produce intermediate products like alloys and magnets, which are critical for high-tech applications.
- Regulatory Constraints: Coastal Regulation Zone (CRZ) norms restrict mining activities in ecologically sensitive coastal areas, where most of India’s REE deposits are located. Additionally, the Atomic Energy Act of 1962 designates monazite as a “prescribed substance” due to its thorium content, limiting mining to public sector entities like Indian Rare Earths Limited (IREL), a Mini Ratna company and the sole entity processing monazite in India.
- Limited Technical Expertise and Infrastructure: As noted by Abhijit Kulkarni of EY Parthenon in a CNBC report, India’s low output is attributed to insufficient refining technologies, limited technical expertise, and inadequate mining infrastructure.
These challenges have hindered India’s ability to capitalize on its reserves, but recent geopolitical developments and strategic initiatives are paving the way for change.
Geopolitical Context and China’s Dominance
China’s near-monopoly on the global REE market, controlling 90% of the rare earth magnet market, has been a focal point of international concern. In April 2025, China tightened export licensing for critical HREEs like terbium and dysprosium, essential for Neodymium-Iron-Boron (NdFeB) magnets used in EVs, wind turbines, and defense systems. This move, part of China’s broader strategy to leverage REEs in its trade war with the United States, has intensified global efforts to diversify supply chains.
According to the International Energy Agency, China’s share of global REE mining is projected to decline from 69% to 51% and refining from 90% to 76% by 2030. This anticipated shift is driven by increasing investments in alternative supply chains, particularly in countries like India, Australia, and the United States. The U.S. Department of Defense, for instance, has invested over $439 million since 2020 to establish domestic REE supply chains, though refining remains a bottleneck, with much of the ore extracted in the U.S. still shipped to China.
India’s Strategic Response: The National Critical Mineral Mission
In response to these global dynamics and its own limited production, the Indian government launched the National Critical Mineral Mission (NCMM) in 2025 to enhance self-reliance in the mineral sector. The NCMM aims to boost domestic mining and processing capabilities, reduce export reliance, and develop the end-to-end value chain for REEs. Indian Rare Earths Limited (IREL) is at the forefront of these efforts, with plans to reduce exports and expand domestic processing in response to China’s export curbs.
The government is also exploring partnerships with the private sector and offering production-based fiscal incentives to encourage investment in REE processing. Additionally, India is focusing on research and development (R&D) and international collaborations to overcome technical and infrastructural limitations.
Strategic Global Partnerships
India is actively forging international partnerships to strengthen its REE supply chain. A key ally in this endeavor is Australia, the world’s fourth-largest REE producer. The India–Australia Critical Minerals Investment Partnership, established through a Memorandum of Understanding (MoU) signed in March 2022 between Khanij Bidesh India Ltd (KABIL) and Australia’s Critical Minerals Facilitation Office, facilitates investments in Australian REE projects. The CSIRO-led India–Australia Critical Minerals Research Partnership, funded through 2026, supports joint R&D across the entire value chain, from exploration to recycling.
These initiatives are reinforced by the broader India–Australia Comprehensive Strategic Partnership and the Quad’s minerals cooperation framework. A July 9, 2025, report by The Economic Times highlighted India’s ongoing discussions with Australia to secure access to rare earth minerals amid global shortages triggered by China’s export controls.
Lessons from Japan
Japan’s experience following China’s 2010 REE export embargo provides a valuable blueprint for India. The embargo, prompted by a territorial dispute, disrupted Japan’s manufacturing sector, prompting the country to invest in Australia’s Lynas Rare Earths through the Japan Australia Rare Earths (JARE) joint venture. This strategic move, backed by $450 million in funding, reduced Japan’s reliance on Chinese REEs from over 90% to 58% by 2022, according to Quartz. India can adopt a similar state-led approach to diversify its supply chains and reduce dependence on China.
Opportunities for India’s Industrial Transformation
India’s 8% share of global REE reserves positions it as a vital alternative source in the global market. Gracelin Baskaran, Director of the Critical Minerals Security Program at CSIS, told CNBC that India is “poised to play a key role in building a more diversified global rare earths supply chain.” The country’s strategic push towards self-reliance, spurred by geopolitical tensions and China’s dominance, presents significant opportunities for investors in the EV, renewable energy, and defense sectors.
To capitalize on this potential, India must address its regulatory and institutional challenges. The Atomic Energy Act’s restrictions on private-sector participation in monazite mining have limited scalability, but recent government efforts to explore public-private partnerships and provide capital subsidies signal a shift towards greater flexibility. Specialized industrial zones and focused R&D are also critical to evolving beyond REE oxide production to manufacturing value-added products like rare earth metals and magnets.
The Importance of REEs Across Sectors
The importance of REEs cannot be overstated, as they are integral to clean energy technologies, automotive applications, and defense systems. For nations with high-tech defense and infrastructure programs, consistent access to REEs is essential to avoid cost overruns and deployment delays. As global reliance on China persists in the near term, the development of alternative supply networks will be crucial. Increasing investment, simplifying permitting procedures, and fostering international cooperation are key to reducing concentration risks and building a more resilient global REE landscape.
Conclusion
India’s 8% share of global REE reserves, coupled with its strategic initiatives and international partnerships, positions it as a key player in the evolving global supply chain. While challenges such as complex extraction processes, regulatory constraints, and limited infrastructure persist, the National Critical Mineral Mission and collaborations with countries like Australia signal a commitment to overcoming these hurdles. As China’s dominance in REE mining and refining is projected to decline, India has a unique opportunity to leverage its resources, support critical sectors, and contribute to a more balanced and resilient global supply chain. With sustained investment and policy reforms, India’s rare earth sector could drive significant industrial transformation, benefiting both its economy and global markets.
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 strategically vital minerals, including Light Rare Earth Elements (LREEs) like neodymium and praseodymium, used in electric vehicle motors and wind turbines, and Heavy Rare Earth Elements (HREEs) like dysprosium and terbium, critical for military-grade magnets and high-performance electronics. These elements are essential for clean energy, automotive, and defense sectors, making consistent access crucial to avoid cost overruns or delays in high-tech programs.
2. Why does India contribute less than 1% to global REE mining despite having 8% of the world’s reserves?
India’s limited contribution stems from multiple challenges: the complex and costly extraction process due to the radioactive nature of monazite sands, an incomplete industrial value chain lacking facilities for producing alloys and magnets, restrictive Coastal Regulation Zone (CRZ) norms, and the Atomic Energy Act of 1962, which limits monazite mining to public sector entities like Indian Rare Earths Limited (IREL). Additionally, insufficient refining technologies and mining infrastructure hinder large-scale production.
3. How is India addressing its low REE production?
The Indian government launched the National Critical Mineral Mission (NCMM) in 2025 to boost self-reliance in the mineral sector. This includes expanding domestic mining and processing, reducing exports, and offering production-based fiscal incentives. India is also exploring public-private partnerships, investing in research and development, and forging international collaborations, such as the India–Australia Critical Minerals Investment Partnership, to enhance its REE value chain.
4. What role does China’s dominance play in India’s REE strategy?
China currently controls 69% of global REE mining and 90% of refining, but its share is projected to decline to 51% and 76%, respectively, by 2030 due to global diversification efforts. China’s export restrictions, particularly on HREEs like terbium and dysprosium, have prompted India to reduce exports, expand domestic processing, and position itself as an alternative supplier, leveraging its 8% share of global reserves to meet growing demand in clean energy and defense sectors.
5. How is India collaborating internationally to strengthen its REE supply chain?
India is actively partnering with countries like Australia, the world’s fourth-largest REE producer, through initiatives like the India–Australia Critical Minerals Investment Partnership (signed in March 2022) and the CSIRO-led Critical Minerals Research Partnership, funded through 2026. These collaborations focus on joint research, investment in Australian REE projects, and building resilient supply chains, supported by the broader India–Australia Comprehensive Strategic Partnership and the Quad’s minerals cooperation framework.
