by Sourabh Joshi

Indian automobile makers are raising concerns as China's restrictions on rare earth magnet exports disrupt supply chains. These restrictions, citing national security, impact critical industries like electric vehicles.

Many of them have invested heavily in component manufacturing due to push and incentives from Indian government but the critical magnets required for EV manufacturing are stuck at Chinese ports. What India can do to secure its rare earth supplies? How can India become a crucial player in rare earth supply chain?

India’s Rare Earth Policy 2025 marks a bold pivot in its strategic and industrial thinking. Long dependent on China for refined rare earths—despite having significant domestic reserves—India is now seeking to transform itself into a major global player in the rare earth supply chain. The same is further exacerbated by Beijing’s decision to impose strict curbs on rare earth magnet exports, which are vital for electric and petrol vehicles, defence equipment’s has begun to strain supply lines.

India, the world’s third-largest automobile market, is among one of the hardest hits by this change in policy by China, The Society of Indian Automobile Manufacturers (SIAM) warned in early April that component inventories could run out by June. Indian automobile companies told government that production can come to halt in case Chinese export restriction remain in force.

To further rub salt to the wounds Indian firms are reportedly being asked by Chinese suppliers to purchase entire motor assemblies to bypass red tape, component manufacturers have invested heavily significantly in the manufacturing capacities now if they import entire motor assemblies, they will risk increasing cost and also real risk of losing market share.

China’s Weaponization: The Wake-Up Catalyst

China’s recent restriction of REE exports to U.S. defence firms—and its threats toward Taiwan and Japan—have demonstrated how minerals can be used as a tool of coercion. Even US president Donald trump had to rush in for a immediate meeting with Chinese premier to keep their supply of rare metals running.

"This is not just about economics. It’s about national resilience," said a senior Indian official.

India’s shift is not merely reactive—it is transformative.

Why Rare Earths Matter

Rare earth elements (REEs) are the backbone of modern technology and defence industries:

• Neodymium, Dysprosium, Terbium – essential for EV motors and wind turbines
• Lanthanum, Cerium – critical for catalysts and optical systems
• Yttrium, Samarium – key in missile guidance systems and radars

Though China produces about 61% of REE, Yet over 85% of global refining capacity lies in China, giving Beijing a powerful geopolitical lever.

Rare earths are neither used in heavy quantities, and they are not rare as well, however here capacities to produce and refine the rare earth is required.

India’s Rare Earth Reserves Vs Imports

India’s Estimated Rare Earth Reserves

• India holds about 6.9 million metric tons (MMT) of rare earth oxide (REO) equivalents.

• This is approximately 6% of the global total.

• Major deposits are found in:

o Monazite-rich beach sands (Tamil Nadu, Kerala, Andhra Pradesh)

o Inland alkaline complexes (Jharkhand, Chhattisgarh, Rajasthan)

• With extensive exploration with support of private enterprise is expected to increase this number rapidly.

India’s Rare Earth Imports: Scale And Trends

In 2023–24, India imported approximately 7,000–8,000 metric tons of rare earth oxides and metals which is miniscule in terms of huge deposit we hold.

Rare earth metals/magnets are required in very small quantity for all kinds of :-EVs/Semiconductor chips, electric motors, braking systems systems/smartphones, aerospace, components, missile technology albeit required in small quantity but they are extremely critical components, and production is impossible without rare earth metals.

The Problem: Import Dependence

Despite having an estimated 6% of global rare earth reserves, India imports most of its refined REEs. Barriers have included:

• Outdated regulatory frameworks

• Limited private sector access

• No domestic refining or magnet manufacturing scale

• Environmental bottlenecks

This left India vulnerable to supply disruptions and strategic coercion.

Rare Earth Policy 2025: Key Reforms

India’s new policy, announced in March 2025, aims to:

1. Liberalize exploration and mining with private sector participation.

2. Establish the Indian Rare Earth Mission Authority for integrated project development.

3. Fast-track refining and separation technologies, with focus on ESG compliance.

4. Set up strategic reserves of critical rare earths.

5. Promote value-added industries—magnets, alloys, EV components—under Make in India.

Strategic Partnerships

India has signed bilateral MOUs and tech-cooperation deals with:

• Australia: for joint mining and processing R&D

• Kazakhstan and Uzbekistan: on raw material sourcing and investment

• Vietnam and Japan: for tech sharing and refining support

These ties are aimed at building a Non-Chinese rare earth supply corridor.

The Road Ahead: What India Must Do

To truly become a rare earth powerhouse, India must:

• Invest in refining and magnet-making infrastructure

• Offer production-linked incentives (PLIs) for REE-based industries

• Create REE-specific R&D and skill hubs

• Balance mining expansion with strong environmental oversight

Conclusion

Rare earths may not be geologically rare—but control over them is strategically priceless. If India gets the Rare Earth 2025 policy right, it can emerge not just as a supplier—but as a strategic influencer in the global technology and defence landscape.

The minerals beneath India's soil could very well power its rise above the geopolitical ground as it gains heft in coming decades and rise toward great power status.