Bridging the gap between India’s rare earth reserves and extraction challenges

Rare earth elements have increasingly become the backbone of the global clean-tech and digital economy. From electric vehicle motors and wind turbines to lithium-ion batteries, advanced electronics, semiconductors and defence systems, these materials are indispensable to the technologies shaping the future.

India sits on a strong geological foundation, with nearly 6.9 million metric tonnes of rare-earth oxide reserves, placing it among the world’s resource-rich nations. Yet, despite this advantage, India produces only around 2,900 tonnes annually, accounting for less than one percent of global output. As a result, the country remains heavily import-dependent, relying on overseas suppliers not only for rare earth magnets but also for battery-grade materials and downstream components critical to clean energy systems. This gap between what India possesses and what it harnesses represents a strategic vulnerability at a time when global supply chains for critical minerals are being restructured around resilience and security.

A key challenge lies in the midstream stages of the value chain. While India extracts and separates rare earth oxides at a limited scale, the capabilities required to convert these oxides into high-purity metals, permanent magnets, and technology-grade materials remain underdeveloped. A similar gap exists in lithium-ion battery materials, where refining, purification and cathode-grade processing largely occur outside the country.

Nations such as China invested decades in building integrated ecosystems that span mining, refining, metal production, magnet manufacturing and battery materials processing. This is why they control nearly 70 percent of global rare earth processing and a dominant share of lithium-ion battery supply chains.

India, by contrast, continues to import rare earth magnets and battery-grade inputs annually, particularly neodymium-iron-boron magnets and refined lithium, nickel and cobalt compounds that power EVs, electronics, robotics and grid storage. Even when raw materials are available domestically, much of the economic value is captured overseas.

Environmental and technological complexity further compounds the issue. Rare earth and battery material processing generates waste streams that require advanced treatment infrastructure, radiation safeguards and responsible disposal systems. These requirements demand long-term investment, regulatory clarity and industrial coordination. While India has research capabilities across public laboratories and academic institutions in both rare earths and battery recycling, the transition from lab-scale innovation to industrial deployment has been slow. This gap between research and commercial execution continues to limit scale across the critical minerals ecosystem.

Where global discussions often focus narrowly on mining, India’s opportunity lies increasingly above ground. As one of the world’s largest generators of electronic waste, producing an estimated 3.8 million tonnes annually, the country holds a significant secondary reservoir of critical minerals. End-of-life electronics, lithium-ion batteries, EV motors, consumer devices, data-centre hardware and industrial equipment contain recoverable quantities of neodymium, dysprosium, lithium, cobalt and nickel.

Urban mining through structured recycling offers a pathway to recover these materials with lower environmental impact than primary extraction, while improving supply reliability. For a country scaling electric mobility and energy storage simultaneously, integrating battery recycling with rare earth recovery is emerging as a practical route to reduce import dependence and stabilise material flows.

The urgency for action is increasing. In leading India’s clean energy transition, the country is going to rapidly grow its renewable capacity and also reach its electric mobility goals. This increase in domestic clean energy will lead to a jump in the domestic demand for rare earths. The electric vehicle industry alone will create demand for magnet grade rare earth materials at a rate of several times what India currently needs.

In addition to growing the domestic demand for rare earths through the growth of electric vehicles, India’s future supply of magnet grade rare earths is going to be created by creating a value chain for rare earth extraction, refining, and magnet component manufacturing. The Indian government is showing a strong commitment to developing this sector through the recent provision of opportunities to auction key mineral rights and provide financial assistance to companies manufacturing magnets, but in order for these initiatives to be successful, they must be taken to full execution.

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