FROM DEPENDENCY TO DIPLOMACY: India's Global Play for Rare Earths

AS GLOBAL CLEAN tech and digital industries surge forward, rare earth elements (REES) have become the new oil, central to everything from electric vehicles and semiconductors to defence applications.

- By Amit Kapoor & Anandita Doda

Yet, India's current REE supply chain tells a sobering story of dependency. Despite possessing domestic reserves, India continues to rely heavily on imports for refined rare earth products, with China dominating this trade.

India's rare earth imports rose from 1,848 tonnes in FY 2019-20 to 2,270 tonnes in FY 2023-24, marking a 23 per cent increase over five years. In FY 2023-24 alone, India imported 1,185 tonnes of rare earth metals, of which 699 tonnes (59 per cent) came from China. Other suppliers included Hong Kong (234 tonnes), Japan (192 tonnes), and Mongolia (60 tonnes). China currently controls about 70 per cent of the world's REE mine production and a staggering 85-90 per cent of global refining capacity. In fact, in 2024, China's domestic output of rare earths was 2,70,000 metric tonnes, up from 2,55,000 metric tonnes in 2023. In 2024, India imported 460 tonnes of rare earth magnets - especially Neodymium-Iron-Boron (NdFeB), almost entirely from China, with planned imports rising to 700 tonnes this year.

This trend underlines a strategic risk: while India's REE consumption remains modest today, growing demand across defence, clean energy, electric vehicle (EV) and electronics could render this dependence a significant vulnerability. This dependence places India in a fragile position. A key challenge India faces is its continued dependence on China for refined rare earths, due to limited domestic refining capacity and underdeveloped processing infrastructure. As China tightens export rules including new licensing mandates introduced in 2024, it raises concerns over supply security. These developments highlight the urgency for India to diversify its sources through new diplomatic and trade channels.