India stands to potentially benefit from the U.S. proposed rare earth trade bloc, an initiative designed to counter China's dominance in the critical minerals market. This bloc, known as the Forum on Resource, Geostrategic Engagement (FORGE), aims to secure and diversify supply chains for minerals essential to defense and advanced industries. With over 50 countries, including India, Japan, South Korea, Australia, and the EU, the U.S. is seeking to establish a trading network that uses tariffs to maintain prices and defend against China's tactic of flooding the market to undermine competitors.
India's participation aligns with its strategic goals of reducing reliance on China for rare earth elements (REEs). China's export curbs in 2025 significantly impacted India's electronics and auto sectors, highlighting the vulnerabilities of supply chain dependencies. By joining FORGE, India can de-risk its supply chains through structured international cooperation. External Affairs Minister S. Jaishankar has emphasized the need for greater resilience through initiatives like the National Critical Minerals Mission, Rare Earth Corridors, and responsible commerce.
India possesses the world's third-largest reserves of rare earth elements, estimated at 6.9 million metric tons. However, its production remains modest, accounting for only a small fraction of the global supply. The Indian Rare Earth Elements (REE) market is valued at USD 9.03 billion in 2024, driven by demand in electronics, automotive (especially EV motors), renewable energy, and defense applications. It is forecast to grow at approximately 9% CAGR from 2024 to 2030, stimulated by domestic magnet production and expanding high-tech industrial consumption.
The U.S. initiative includes a proposed price-stabilization framework and is backed by U.S. public financing tools, including up to $100 billion in lending authority. Vice President J.D. Vance has stated the U.S. government would set baseline prices for rare earths to ensure foreign competitors cannot undercut domestic producers. This move aims to make prices for critical minerals more predictable and less erratic, encouraging investment in the U.S. critical minerals industry.
Several factors could determine the extent of India's gains from this bloc. Efficiently tapping into its reserves is crucial. India's mine output is approximately 2,900 metric tons per year, which is less than 1% of the global supply. The country needs to bridge the gap between its reserves and production to become a key long-term supplier. Key regional hubs such as Kerala, Odisha, and Visakhapatnam, with their established processing infrastructure and government-backed initiatives, could play a significant role. IREL (India) Limited, a PSU, is a major player in the India REE market, along with regional extractors.
Participating in FORGE could provide India with access to advanced technologies and investments needed to enhance its rare earth processing capabilities. Moreover, the bloc could facilitate technology transfer and collaborative research, boosting India's expertise in the sector. Finance Minister Nirmala Sitharaman announced government support for mineral-rich states to develop dedicated rare earth corridors and the Indian Semiconductor Mission 2.0, further aligning with the bloc's objectives.
However, India needs to carefully navigate the complexities of the international trade landscape. Ensuring that the bloc's policies are fair and equitable to all members, especially developing nations, is essential. Additionally, India must focus on developing environmentally sustainable mining and processing practices to align with global standards and maintain its reputation as a responsible player in the rare earth industry.
Overall, the U.S.-proposed rare earth trade bloc presents a significant opportunity for India to strengthen its position in the global rare earth market, reduce its dependence on China, and drive growth in its domestic high-tech industries. By leveraging its reserves, enhancing its production capabilities, and actively participating in the bloc's initiatives, India can potentially secure a more prominent role in the evolving global rare earth landscape.