Can India power its 6.9 million tonnes of rare earth mineral reserves?

Overview: – India has the world’s third largest rare earth reserves at 6.9 million tonnes, but accounts for only 0.7% of global production. With the ₹7,280 crore policy push and 6,000 MTPA REPM target, implementation will determine whether the resources are converted into a strategic and industrial force.

India’s technology and energy transition is accelerating as rare earth elements gain strategic importance. The 17 REEs support more than 200 advanced applications, making them essential for electromobility, renewable energy and high-tech manufacturing amid rapid global technological change.

Following supply disruptions due to the pandemic, India has prioritized rare earths in its self-reliance agenda. Through domestic resources and policy support, the country aims to reduce import dependence and strengthen key sectors such as clean energy, defence, and electronics over the next decade.

Strategic importance of REE

Rare earth elements act like “vitamins” in modern industry, needed in small quantities but essential for performance. Its unique magnetic, catalytic and phosphorescent properties make it indispensable to advanced technologies. Elements such as neodymium and eurodium enable powerful motors, high-quality displays, and precision electronic functions.

They are embedded across everyday and strategic applications, including smartphones, laptops, wind turbines, electric vehicles, drones, and defense systems. Even medical equipment relies on REE for accuracy and efficiency. Without it, the production of many advanced and green technologies will face serious limitations.

Rare earths are not actually rare in nature, but extracting them is technically difficult. Economically viable, concentrated deposits are not common, especially for heavy rare earths. Securing a stable supply of REEs has become a strategic challenge globally due to complex mining, processing difficulties, and environmental concerns.

China’s REE dominance

For decades, China has dominated the global rare earths market, leveraging its cost advantages and relatively lax environmental standards to produce more than 95% of global supply in the early 2000s. In 2024, China will still control nearly 70% of global production, underscoring its continued influence over critical mineral supply chains.

But geopolitical tensions and the global clean energy push are pushing diversification away from China. The United States and Myanmar currently contribute about 8 to 12 percent each, with Australia and other countries adding smaller shares. Even though global production of rare earth oxides has nearly tripled since 2017 to about 390,000 metric tons, India’s production remains limited to about 0.7%.

Concentration of global reserves

When it comes to rare earth reserves, China holds an overwhelming lead with about 44 million tons, far ahead of Brazil’s 21 million tons. This concentration explains China’s long-standing influence over global rare earth supply chains and pricing power.

India is one of the top holders, with reserves of about 6.9 million metric tons, similar to Australia and ahead of Russia and the United States. Despite this resource base, India’s production remains limited and represents significant untapped potential in rare earth mining and processing.

Make in India REPM

Recently, the Union Cabinet approved a ₹7,280 crore scheme to promote domestic manufacturing of sintered rare earth permanent magnets. The plan is targeting a combined capacity of 6,000 MTPA, the first of its kind in India. It aims to strengthen self-reliance, reduce dependence on imports and position India as a competitive player in the global permanent magnet value chain.

A total of Rs 728 billion will be spent under the scheme with the aim of promoting domestic REPM manufacturing. This includes ₹6,450 crore as sales-related incentives over five years and ₹750 crore as capital subsidy to help build manufacturing capacity of 6,000 MTPA, strengthening India’s rare earth processing ecosystem.

risk factors

• India lacks advanced rare earth separation and processing technologies, especially for heavy REEs, making commercial extraction slow, expensive and dependent on overseas expertise.

• Rare earth mining involves radioactive waste and environmental risks, resulting in strict regulations, long approval timelines and potential public opposition to large-scale projects.

• Developing rare earth mines and downstream facilities requires significant upfront investments with long payback periods, which may discourage private sector participation and delay capacity creation.

• Limited domestic manufacturing of magnets and advanced components will reduce value capture, risking India remaining a supplier of raw materials rather than a full value chain participant.

conclusion

India’s rare earth ambitions are strategically timely but highly actionable. While 6.9 million tonnes of reserves and ₹7,280 crore policy push provide a strong foundation, success will depend on building processing technology, downstream magnet capacity and environmental protection. If these gaps are addressed, rare earths can meaningfully strengthen India’s industrial, energy and defense security in the long term.

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