Highlights

• India holds the world's third-largest rare earth reserves.
• India produces less than 1% of rare earth minerals globally.
• The country faces technological and regulatory challenges in rare earth production.
• The Indian government plans to launch the National Critical Mineral Mission in 2025.
• India has signed strategic mineral pacts with the U.S. and Australia to diversify rare earth element (REE) production.
• Global industries are seeking alternatives to China's dominance in the rare earth market.
• India is positioned to become a potential strategic supplier of rare earth elements (REE).

---

As China weaponizes its dominance in rare earth elements (REEs) by suspending exports amid escalating trade tensions with the United States, attention has shifted to emerging players like India. With the world scrambling to diversify supply chains for critical materials essential to defense, semiconductors, clean energy, and consumer electronics, India finds itself in a paradox: rich in reserves, poor in production.

India holds the third-largest reserves of rare earth elements globally—estimated at 6.9 million metric tons, largely in Andhra Pradesh, Odisha, Kerala, and Tamil Nadu. Yet, India contributes less than 1% to global REE production. The gap stems from a combination of structural and policy bottlenecks: limited private sector participation, technological shortfalls, weak refining infrastructure, and regulatory hurdles related to the radioactive nature of monazite—the country’s principal REE-bearing mineral.

India’s reserves are primarily composed of light REEs (Lanthanum, Cerium, Samarium), which are already oversupplied globally. In contrast, the heavier, high-value REEs like Dysprosium and Terbium—crucial for permanent magnets in EVs and advanced military systems—remain scarce and are still monopolized by China reports Indian Express (opens in a new tab).

India National Critical Mineral Mission

The Indian government has responded by amending the Mines and Minerals Act in 2023 (opens in a new tab), officially classifying rare earths as Critical Minerals, and in 2025, launching the National Critical Mineral Mission. Additionally, India has signed strategic mineral pacts with the U.S. and Australia, aimed at securing clean-tech supply chains and attracting private capital. These moves represent a long-overdue policy pivot, but actual production and processing capabilities remain nascent.

“India’s rare earth moment is now—but without urgent investment in refining tech, environmental safeguards, and private sector incentives, these reserves will stay buried,” said a Rare Earth Exchanges analyst. “Global OEMs looking to hedge against China won’t wait forever.”

India’s challenge is not scarcity, but scalability. While its geological endowment is promising, it must resolve environmental concerns, attract technology partners, and create a credible roadmap from exploration to refined REE oxide output. Recycling e-waste and urban mining also present viable alternatives to raw extraction, especially given the geopolitical imperative to secure clean and sustainable REE flows.

Outstanding Questions

• Can India overcome its regulatory constraints related to monazite to build a competitive rare earth element (REE) refining industry?
• Will the 2025 National Critical Mineral Mission lead to permitting reform and increased capital inflow?
• Does India possess the necessary critical infrastructure to ramp up refining and value-added production rapidly?
• Can India tap into global demand for heavy rare earth elements (REEs) or remain confined to low-margin light REE extraction?

As global industries seek to derisk from Beijing’s rare earth chokehold, India’s choices over the next 24 months will determine whether it becomes a serious REE alternative or a missed opportunity.