In a strategic move to counter China's dominance in the rare earth element (REE) market, India is planning to offer grants and ease regulatory norms for rare earth processing. This initiative aims to boost domestic production, reduce reliance on imports, and secure a 10% share of the global rare earth processing market. The decision comes amid growing global concerns over China's tightening grip on REE exports, which are critical for high-tech industries and electric vehicles.
The Indian government recognizes the importance of REEs for its economic growth and technological advancement. These elements are essential for various sectors, including electronics, renewable energy, and defense manufacturing. Commerce and Industry Minister Piyush Goyal has described China's rare earth export restrictions as a "wake-up call," emphasizing that India is actively building alternative supply chains while positioning itself as a trusted partner for international businesses seeking to reduce their dependence on Chinese suppliers.
India possesses the world's fifth-largest rare earth reserves, estimated at 6.9 million tons. However, it contributes less than 1% to global REE production. The key constraints include a state monopoly, regulatory and policy challenges, technological gaps, and limited research and development. To address these challenges, the government is taking several steps.
One of the major steps is the launch of the National Critical Mineral Mission (NCMM) in 2025, with a substantial budget of ₹34,300 crore spread over seven years. This mission aims to enhance domestic exploration and mining efforts, minimize import dependency, and establish a robust framework for self-reliance in the critical mineral sector. The Geological Survey of India (GSI) has been tasked with conducting 1,200 exploration projects from 2024-25 to 2030-31 under this mission.
To encourage private sector participation, the government has amended mining laws, removing minerals such as lithium, niobium, titanium, beryllium, tantalum, and zirconium from the list of atomic materials. This provides an opportunity for private companies to explore and mine these minerals. A new Exploration Licence (EL) will also be introduced to encourage private sector participation, and a fast-track regulatory approval system will be implemented to speed up projects.
The government is also exploring public-private partnerships (PPPs) to attract investments in processing technologies and scale up REE processing in India. Additionally, it is promoting the recovery of minerals from secondary sources like fly ash, tailings, and red mud through relaxed rules and incentives.
India is also focusing on international collaborations to secure a viable alternative stream of supply for critical minerals. It has partnered with countries like Australia, Japan, and the United States. India is also engaging with China both commercially and diplomatically on the issue of rare earth minerals supply to ensure essential imports. Furthermore, India and Central Asian countries have expressed interest in joint exploration of rare earth and critical minerals.
In a recent development, India has directed state-owned miner IREL (India) to suspend a 13-year-old rare earth export agreement with Japan. This decision is a strategic move to secure domestic supply and reduce reliance on China. The government wants to prioritize neodymium, a key material used in magnets for electric vehicle motors, for national use.
These initiatives demonstrate India's commitment to developing its domestic rare earth element supply chain and reducing its dependence on China. By offering grants, easing regulatory norms, and promoting private sector participation, India aims to become a major player in the global rare earth market and secure its strategic interests.
