India moves to tap its rare earth reserves. Can it ease reliance on China? Clutch Fire

India, like many countries, is grappling with Beijing’s restrictions on rare earth element (REE) exports — and it wants to develop its own domestic supplies. Experts say it could become an important alternative to China in the sector, but will require much more public and private investment.

In recent weeks, the world has been facing a rare earths shortage in light of curbs from China. Auto manufacturers across India, the U.S., Japan, South Korea and Germany have been affected. 

In response, Indian officials are evaluating how Indian Rare Earths (IREL), a government-owned company, can be leveraged to increase REE production, sources told CNBC-TV18.

The report comes just days after India’s Union Minister of Commerce and Industry Piyush Goyal called China’s pause in exports of rare earth elements a “wake-up call” for the world and an opportunity for India to provide an alternative. 

Geoffrey Pyatt, senior managing director of critical minerals at McLarty Associates and former U.S. assistant secretary of state for energy resources from 2022 to 2025, echoed the commerce minister’s statements. 

“This is both a wake-up call and an opportunity for us to deepen U.S.-India collaboration on an issue important to future economic competitiveness,” he told CNBC. 

Beijing recently signaled plans to ease controls, and U.S. President Donald Trump has said that a trade deal with China that includes a resolution on rare earths is “done.” But China’s control of rare earth exports was not a new policy, with gradual restrictions of international sales occurring over the past two years. 

The recent shortage has further highlighted the country’s dominant position in REEs: It produces roughly 60% of the world’s supply and processes almost 90%, which includes materials imported from other countries. 

That gives Beijing considerable leverage over a supply of minerals crucial for various modern technologies, including robotics, clean energy, batteries and military equipment.

It’s important to note, however, that rare earths are not rare in nature. While China has the largest deposits of REEs at 44 million tons, India also has a substantial amount at 6.9 million tons, according to the U.S. Geological Survey. That gives it the world’s third-largest share of reserves behind that of Brazil, as per the agency’s records.

India also has nearly 35% of the world’s beach and sand mineral deposits, which are significant sources of important rare earths, according to a recent report from EY.

Given those considerable reserves, India is “poised to play a key role in building a more diversified global rare earths supply chain,” Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, told CNBC. 

However, in order to use REE reserves, countries need the ability to mine and extract raw materials, as well as the capacity and technology to process and refine them for final use.

So far, India is lacking in advanced separation and refining technology, especially compared with China, the U.S. and Japan, said Abhijit Kulkarni, partner at EY Parthenon, noting that India so far contributes less than 1% of global REE production.

Other challenges India faces is a lack of specialized technical expertise in REE mining and processing as well as poor infrastructure in India’s mining regions, he added.

As part of efforts to change that, India launched the National Critical Mineral Mission in 2025. The initiative aims to develop an effective framework for REE self-reliance in the face of China’s restrictions and other threats posed to the geographically concentrated supply chain.

Sources told CNBC-TV18 the Indian government is also considering private sector collaboration with IREL. Among the options being considered are government incentive schemes and capital subsidies aimed at encouraging local mining and processing.

According to Kulkarni, a lack of private sector participation in India’s REE space, in particular, has stifled innovation and scalability. Working in its favor, however, is booming domestic demand across technology sectors including electric vehicles, electronics and defense.

“This dual factor makes India both a potential supplier and consumer, which encourages government and industry investment into building domestic capabilities,” he said.

India is already in the process of completing several domestic REE projects, including a IREL rare earths magnet plant.

“India will not be able to replace China’s position in the market, but it can certainly play an important role in providing a new source of rare earths,” CSIS’ Baskaran said. 

In the meantime, Commerce and Industry Minister Piyush Goyal said India is also searching for alternative REE sources outside China. 

A delegation of Indian auto industry representatives is also gearing up for a China visit in an attempt to expedite their imports of rare earth magnets, according to local reports citing industry sources.