India possesses the world’s third-largest rare-earth reserves, concentrated mainly in monazite-bearing coastal sands, bastnaesite, and allanite-bearing stone deposits in mountain regions. Monazite, for instance, is abundantly available in coastal beach sands, with Andhra Pradesh holding around 3.69 million tonnes, Odisha 3.06 million tonnes, Tamil Nadu 2.46 million tonnes, and Kerala 1.84 million tonnes — for a total of roughly 11 million tonnes nationwide. Bastnaesite and allanite, on the other hand, are concentrated in the mountain rocks of Andhra Pradesh, Jharkhand, West Bengal, Karnataka, and Gujarat.

Monazite Deposits

Among these, monazite represents the predominant and most accessible source of Rare Earths. Yet, the full chemical characteristics of India’s monazite deposits remain insufficiently studied. This lack of detailed information has been a significant barrier to the development of domestic processing technologies. Yet this geological advantage has never translated into technological leadership. Domestic capabilities remain confined to mining and basic chemical processing, producing low-value rare earth chlorides and oxides at legacy facilities, primarily under Indian Rare Earths Ltd. Advanced separation, metallisation, alloying and magnet manufacturing, the final product, where value, technology and strategic leverage truly lie, have remained outside India’s grasp.

This gap has had predictable consequences. India imports the overwhelming majority of its rare-earth permanent magnets, with 80%–90% sourced from China, which accounts for over 90% of global processing and magnet production. Imports surged to nearly 25,000 metric tonnes in 2024–25 and are set to double by 2030, driven by the expansion of electric mobility, renewable energy, and defence manufacturing.

The government has begun responding to this challenge in stages. The Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets, approved in November 2025 with an outlay of ₹7,280 crore, was an essential first step. It aims to build 6,000 tonnes per annum of integrated magnet capacity over seven years, supported by capital- and sales-linked incentives. However, the scheme primarily addressed the final manufacturing stage within 24 months, leaving unresolved the deeper technological bottlenecks in the upstream and downstream sectors.

Regulatory Constraints

India’s rare-earth challenge is one of specificity as much as scale. Varied monazite compositions demand deposit-specific technologies, yet advanced R&D and pilot facilities — especially for heavy rare earths — are lacking. Regulatory and environmental constraints have further deterred private participation and technological innovation.

It is precisely these structural gaps that the REE corridors seek to address. By co-locating mining, advanced processing, R&D and manufacturing in monazite-rich states, the initiative aims to build complete value chains rather than isolated capacities. Integrated hubs can reduce logistics costs, accelerate technology adaptation, support skill development, and enable faster transitions from laboratory research to commercial production. Crucially, they also allow for stronger environmental oversight and safer handling of radioactive by-products.

The strategic implications are substantial. Rare earth elements underpin critical technologies across defence, clean energy, mobility and electronics. In defence alone, heavy rare-earth elements such as neodymium, dysprosium, gadolinium, samarium, and cobalt are indispensable for missile guidance systems, radar arrays, jet engines, and electronic warfare platforms. Though limited in India’s reserves, they are especially vital for performance and reliability in extreme conditions. The REE corridors, aligned with the National Critical Minerals Mission, directly strengthen national security by reducing exposure to external supply shocks.

Rare Earth Elements

The mobility and energy transitions stand to gain equally. Permanent magnet synchronous motors are central to electric vehicles, railways, wind turbines and industrial automation. Domestic magnet supply can lower costs, stabilise production, and support India’s push towards electrified transport—from two-wheelers and buses to ports, warehouses and inland waterways. Downstream industries such as medical imaging, consumer electronics, and advanced ceramics will also benefit from predictable access to high-quality rare-earth materials.

The economic potential is considerable. Industry estimates suggest that downstream investments across EVs, renewables, medical equipment and electronics could mobilise over ₹40,000 crore in each state and generate tens of thousands of skilled jobs. Importantly, clustering production within REE parks creates the conditions for sustained innovation rather than one-off capacity creation.

Challenges, however, remain. India’s reserves are skewed towards light rare earths, necessitating careful allocation—prioritising defence and strategic sectors — while pursuing overseas partnerships to secure access to heavy rare earths. Effective coordination across ministries, clear governance frameworks, and consistent regulatory signals will determine whether the corridors mature into globally competitive ecosystems or remain industrial enclaves.

REE Parks

There is also an often-overlooked strategic opportunity. Thorium, a by-product of monazite processing, holds promise for India’s long-term nuclear energy ambitions, given the country’s vast reserves along the Kerala coast. With its exceptional energy potential, thorium-based fuels could strengthen energy security. One tonne of thorium-rich hybrid fuel can generate 1 million megawatts of clean energy.

The proposed REE parks, by integrating processing with advanced research, could catalyse systematic R&D on thorium utilisation, thereby linking India’s critical minerals strategy to its long-term energy goals.

Seen in this broader context, the REE corridors represent more than an industrial policy intervention. They signal a shift in strategic thinking—from exporting raw potential and importing finished vulnerability, to building resilient, technology-driven supply chains at home. If executed with institutional discipline and technological ambition, this initiative could mark a decisive turning point in India’s quest for national security, economic security, energy transition and strategic autonomy.

Atomic Energy Act

However, a major stumbling block lies in the Atomic Energy Act and the rules made thereunder, which restrict the handling, storage, and processing of rare-earth-bearing minerals to public-sector undertakings owing to the presence of radioactive elements such as thorium.

Unless this constraint is addressed through a calibrated regulatory framework that ensures safety without stifling participation, the impact of this otherwise transformative initiative will remain limited.

(The writer is a former Ambassador. He is also an economist and author of 'Energy Security and Economic Development in India: A Holistic Approach', which was published by TERI. Views are personal.)