Unlocking India’s Rare Earth Potential: From policy to production

Rare earth elements are a group of 17 chemically similar metals indispensable to a wide range of advanced technologies.

By Alkesh Kumar Sharma

In the 21st century, strategic advantage is increasingly defined not just by control over oil or gas, but by access to critical minerals. Among these, rare earth elements (REEs) hold unparalleled importance. REEs are a group of 17 chemically similar metals indispensable to a wide range of advanced technologies. They are used in permanent magnets, which are essential for electric vehicles (EVs), wind turbines, and other components of the green energy transition. Their magnetic and luminescent properties also power smartphones, high-performance motors, missile guidance systems, medical imaging technologies, and LED lighting. Neodymium, Praseodymium, Dysprosium, Terbium, and Yttrium, in particular, are at the heart of the clean-tech and defence revolutions. Over 80 per cent of the commercial value of REEs comes from their use in high-strength magnets, making them critical to both economic growth and national security.

However, the global REE supply chain is heavily skewed. China dominates around 70 per cent of global REE production and is virtually the sole exporter of refined heavy rare earths. As early as the 1980s and 1990s, Chinese policymakers identified rare earths as a “strategic resource” vital for future industrial and defence technologies. By the early 2010s, China had begun investing aggressively in both upstream and downstream segments of the REE value chain. According to the U.S. Geological Survey (USGS), China accounted for just 27 per cent of global REE production in 1990.

In recent years, China has tightened export controls on several key REEs, including Dysprosium, Lutetium, Samarium, Terbium, and Yttrium. Though these are not outright bans, the new licensing and permit regimes introduce uncertainty, raise costs, and potentially disrupt global manufacturing. This strategic manoeuvring, amidst rising geopolitical tensions, is a reminder that REEs are not just industrial inputs but instruments of economic influence.

The implications are profound for India. We hold substantial rare earth reserves, estimated at over 7 million tonnes of rare earth oxides in monazite-rich beach sands, and another 1.29 million tonnes in hard rock deposits. These are concentrated across several coastal and inland states, including Kerala, Tamil Nadu, Odisha, Andhra Pradesh, and Chhattisgarh. Yet, despite the abundance, India’s rare earth industry remains underdeveloped and largely unrealised in commercial terms.

One key consideration is the regulatory framework surrounding monazite—India’s primary source of REEs—which contains trace amounts of uranium and thorium. As an atomic mineral under the Atomic Energy Act, 1962, monazite’s extraction has traditionally been managed by public sector enterprises such as Indian Rare Earths Limited (IREL) and Kerala Minerals and Metals Limited (KMML). These institutions have played an important role in establishing India’s early capabilities in rare earth processing and thorium extraction. Looking ahead, there is growing recognition of the need to revisit policy frameworks to encourage responsible private sector participation, particularly in non-monazite REE sources.

Technologically, while REE separation—especially of heavy rare earths—remains complex and environmentally sensitive, India is steadily building its expertise through research collaborations and pilot projects. The country’s existing scientific base offers a strong platform to develop advanced refining capabilities, and global partnerships can help accelerate this journey. Moreover, with environmental safety as a priority, the regulatory focus on radioactive content in monazite presents an opportunity to innovate safer, more sustainable extraction and processing methods. Together, these factors present India with a compelling case to unlock the full value of its rare earth resources while setting global benchmarks for responsible mineral development.

At present, India imports a relatively small volume of REEs—just over 2,200 tonnes in 2023–24—primarily for research and pilot projects. Therefore, the immediate impact of Chinese export controls may appear limited. However, as India ramps up its ambitions in electronics manufacturing, renewable energy, and defence production, demand for REEs will grow rapidly. The time to act is now.

To secure its future, India must take a multi-pronged approach. Strategic partnerships with countries such as Australia, Japan, and Brazil can help diversify import sources and reduce dependence on China. At the same time, domestic exploration and production need to be urgently scaled up. New mining blocks outside monazite sources have already been auctioned in Chhattisgarh, Karnataka, and Uttar Pradesh, but these must quickly move from planning to production. Simultaneously, India must invest in R&D and create processing infrastructure capable of handling REE separation and magnet manufacturing. Establishing dedicated processing parks and incentivising private participation will be key steps in this direction.

Recycling of electronic waste, also called urban mining, offers a promising way to reduce primary mineral dependency. Given the growing volume of discarded electronics in India, a robust circular economy model can help recover valuable REEs while minimising environmental damage.

The government’s National Critical Minerals Mission (NCMM) is central to advancing India’s rare earth ambitions. By enhancing R&D, building industrial clusters, and fostering innovation and partnerships, the mission aims to create a strong policy and manufacturing ecosystem. In a major boost, the outlay for the rare earth magnet manufacturing scheme is set to rise to over ₹5,000 crores, with production targets expected to quadruple to 6,000 metric tonnes annually. These measures will expand industry participation, reduce supply chain risks, and strengthen India’s capabilities in the strategically vital permanent magnet segment. A sustained policy push and timely execution will be key to unlocking the sector’s full potential.

The global rare earth landscape is undergoing a fundamental shift, driven by resource nationalism, economic rivalry, and the push for energy transition. India must seize this moment to reposition itself not just as a resource holder, but as a competitive, Aatmanirbhar player in the global REE value chain. The stakes are high not only for economic security but for strategic autonomy. In rare earths, India may well find its next big opportunity. The choice, and the responsibility, is ours.

(Alkesh Kumar Sharma, former secretary, Ministry of Electronics and Information Technology, Government of India.)

Views are personal and do not represent the stand of this publication.