India's Path To Strategic Autonomy In Rare Earth Elements

India has the fifth largest rare earth reserves, which places the country high up in the order that is expected to reduce global reliance on China. But India is well behind in the mining and processing of these minerals, hindered by lack of private investment, access to technology and environmental hurdles.

Access to REEs is vital for industries from defence to renewable energy, and forms the backbone of high-tech manufacturing. Uneven distribution and geopolitical entanglements, however, are posing significant challenges.

The Geopolitical Significance Of Rare Earth Elements

REEs contain 17 metallic elements that are necessary for EVs, wind turbines, semiconductors and military equipment. Despite considerable abundance in the Earth’s crust, the deposits that are economically viable are concentrated in select regions.

China alone controls 69 per cent of global production and 90 per cent of global processing capacity. This monopoly has enabled it to use REEs as a bargaining tool during economic disputes. 

With the intense competition between global powers, access to REEs has become a contentious issue. India with its vast REE reserves, faces a challenge even as it senses an opportunity. Is India capable of leveraging its vast mineral wealth and push towards its goal of strategic autonomy? 

An estimated 2,900 tonne of rare earth reserves can be found in monazite sands along India's coastal states. Yet, India contributes less than 1 per cent to global REE production.

The key constraints are:

State Monopoly And Regulatory & Policy Challenges: Established in 1950, Indian Rare Earths Limited (IREL) a state-owned enterprise is responsible for the extraction and processing of REEs in India. This monopolistic control has led to lack of innovation. With industry growth being the need of the hour, the government will have to revisit the regulations in order to enable private sector involvement. 

Further, monazite, which is a primary source of REEs in India, is classified as a radioactive material due to high thorium content. Thus, stringent regulatory controls exist for its extraction and processing under the Department of Atomic Energy. Environmental clearances and bureaucratic delays also slowvdown project implementation and discourage potential investors. 

Technological Gaps And Limited Research & Development (R&D): India's lack of advanced separation and refining tech for REEs has compelled major players to continue their reliance on China, Japan and the US for imports. The high capital costs for setting up a domestic processing industry has deterred investments, leading to further foreign technological dependence. 

Compared to China, India’s funding for R&D in material sciences and mineral processing is severely lacking. This disparity has hampered the developments of efficient extraction and processing technologies, limiting India’s competitiveness in the global ecosystem. 

Lack Of A Skilled Workforce & Infrastructure Deficiency: There is a need of a highly specialised workforce for the REE industry. India is facing a severe shortage of skilled and trained professionals which has hindered the penetration of technologies as well as development and operation of advanced processing facilities. 

India’s mining region are facing major deficiencies in infrastructure which has led to increase in operational costs whilst increasing inefficiencies. To address this, a good transport ecosystem and logistical network becomes essential especially when it comes to REE extraction and distribution. 

Implications On Global Value Chains, Manufacturing

India’s reliance on REEs brings up multi-dimensional challenges that have been impacting industrial growth, raising security concerns, questioning technological autonomy and negatively impacting economic competitiveness. China’s dominance in the REE sector is evident, while India’s reliance on China has exposed its industries to significant supply chain risks.  

A historical example highlighting the potential consequences of heavy reliance on the country is the territorial dispute between China and Japan. For two months, China reportedly halted REE exports to Japan, which disrupted Japan’s manufacturing sectors that were reliant on these materials. It shows China’s clout and willingness to use it to its advantage.

If India faces a similar supply chain disruption, it could severely impact its high-tech industries that include electronics, renewable energy and defence manufacture. India will have to explore risk mitigation strategies such as significant investments in domestic mining and processing capabilities whilst seeking alternative international partnerships. 

Access to REEs is crucial for India’s aspirations in multiple sectors as highlighted above. If India gets constrained with its REE supply chain, it could hinder progress in these important sectors and negatively impact initiatives such as “Make in India”. 

Technological Dependence, Economic Competitiveness

Reliance on external sources for REE refinement means that intellectual property and technological expertise remain outside India's control, limiting domestic innovation and self-sufficiency. The lack of domestic REE processing capabilities increases production costs for Indian manufacturers, making Indian goods less competitive in global markets. 

India is the world’s second largest producer of coal and steel and the third largest producer of zinc and iron ore. Yet only a fraction of the country’s geological reserves has been tapped into.

Under exploration has therefore hampered the country’s ability to fully leverage its mineral resources and direct it towards economic growth. This disparity between potential and actual exploration clearly mandates the need for strategic reforms to unlock India’s mining sector.

To begin with, India would do well to increase its R&D investment, infrastructure development, and foster private sector participation to strengthen its position in the global REE supply chain. Figure 1 below gives some perspective.

Current Policy Landscape

India's strategic initiatives in the of Rare Earth Elements (REEs) domain includes international collaborations, policy reforms, domestic initiatives and contemplation of strategic reserves. Let us take a look at these aspects individually.

1. Policy reforms

Amendment of Mining Laws: The Indian government has made amendments to the current set of laws to boost private sector participation and streamline regulatory approvals. Most notably, minerals such as lithium, niobium, titanium, beryllium, tantalum and zirconium have been removed from the list of atomic materials thereby proving an opportunity to the private sector for further exploration and mining. 

Identifying Critical Minerals: India has listed down 30 critical minerals essential for its national security and economic development. This list includes REEs which highlights the intent of domestic extraction and processing as well, thereby underscoring the intent of its economic development and national security. The critical minerals are highlighted in Table 2 below:

2. International Collaborations:

Minerals Security Partnership (MSP): To counter the dominance of China, India has joined the US-initiated MSP so as to secure an alternative supply chain for critical minerals. ​

Bilateral Agreements: To decouple from China, India has further partnered with Australia, Japan and the United Sates to ensure a viable alternative stream of supply for critical minerals. 

These countries are part of the Quadrilateral Security Dialogue (QUAD) arrangement and can work collaboratively. The United States and Australia can provide minerals supply to the QUAD member nations and allies in the Indo-Pacific region.

India can offer an attractive manufacturing ecosystem to its allies where they can avail of affordable EV batteries and solar cells whilst financial backing is provided by the United States and Japan. 

3. Domestic Initiatives And Strategic Reserves

India Rare Earths Mission: India has proposed the creation of the 'India Rare Earths Mission' — a programme aimed at developing domestic mining and refining capacities. This programme seeks to harness India’s domestic REE resources whilst also meeting growing needs from the high-tech industrial sectors. 

Public-Private Partnerships (PPP’s): The government is looking at PPP’s to pull in investments in the processing technologies domain. This strategy is expected to enhance efficiency and scale up REE processing in India. Figure 2 below gives you some insight on the increase in the number of critical minerals projects over recent years. 

Data extrapolated from Press Information Bureau (PIB), Government of India

The figure above highlights that there has been an average increase of 36 per cent in the total number of critical mineral projects over a six-year window.

Thus, with the government realising the importance of REEs to drive the economy, it is considering the creation of the strategic reserves to ensure a steady supply of raw materials. This move will mitigate supply chain disruptions as witnessed in recent history around the works and secure India’s economic and technological interests and aspirations. 

Future Foresight Analysis For India’s REE sector

To anticipate a holistic evolution of the REE sector, India must consider utilising a strategic foresight-oriented approach like the Futures Wheel and Critical Uncertainties Analysis. 

Critical Uncertainties

Identifying key uncertainties along with the Futures Wheel can help India navigate the complexities of this highly volatile ecosystem:

India’s Rare Earth Renaissance: Paving A Strategic Path to Autonomy

India is at an important juncture of its development journey and the REEs have determining role to play in it. India’s expansive reserves of REEs presents a golden opportunity to achieve autonomy and reduced foreign dependence in key sectors.

By implementing targeted policy reforms, fostering bilateral foreign collaborations and investments in advanced technologies India has the opportunity to convert its REE potential into a cornerstone of technological leadership and economic resilience.

India will have to be proactive in this regard to not only reduce dependency on dominant global suppliers but also position itself as a key player in the global high-tech manufacturing race. 

India has already embarked on this journey by initiating policy reforms and partnering with nations who have the correct know-how. What remains to be seen is if India can itself become one of the countries driving global discourse in this complex REE sector.

With multiple nations already calling for supply chain diversification of the sector, can India finally stake its claim by establishing technological sovereignty? The potential is there, the will has to be developed.

(The writer is a public policy and urban transportation enthusiast and specialist. Views are personal)