Rare Earth: India May Have A Problem Of Plenty

That apart, the deposits predominantly contribute Light Rare Earth Elements (LREEs), while Heavy Rare Earth Elements (HREEs) used in specialised, high-performance applications are not available in economically extractable quantities.

That is India’s biggest challenge.

As India moves to become self-reliant in critical minerals and technology, the bigger challenge is to turn this resource base into the high-value materials and magnets required by high-tech strategic industries, including electric vehicles (EVs), renewable energy, electronics, aerospace, and defence.

The demand for Rare Earth Permanent Magnets (REPM) in India is largely being met through imports, with consumption projected to double by 2030 from 4,900 metric tonnes in 2025.

As global risks increase leaving an imprint on supply chain network mineral security would be key but going by the current trend, India’s import dependency is not likely to reduce. 

Abundance Of Light Rare Earth

India's rare earth resources are dominated by Light Rare Earth Elements (LREEs), which are generally more abundant and widely used across industrial and consumer applications. Lanthanum (La), for instance, is used in optical glass, camera lenses, and rechargeable NiMH batteries, while neodymium (Nd) is central to powerful permanent magnets used in electric motors, wind turbines, speakers and headphones.

Heavy Rare Earth Elements (HREEs), by contrast, are generally less abundant and often used in specialised, high-performance applications. Dysprosium (Dy) helps magnets retain performance at high temperatures, while erbium (Er) is used in fibre-optic technology, lasers, and nuclear applications.

The government has launched a scheme to develop permanent-magnet manufacturing in the country, costing ₹7,280 crore. But the challenge is whether India can process and convert the rare earth resources into the materials and magnets required for the strategic industries at scale and at commercially viable costs.

Composition Is Key

India’s rare earth resource base is sizeable, but its composition is important. The country has 13.15 million tonnes of monazite resources, which have a concentration of approximately 7.23 million tonnes of rare earth oxide (REO) equivalent, and another 1.29 million tonnes of in-situ REO have been identified in hard rocks. There are also 2,000 tonnes of heavy-mineral concentrates (HMC) found in riverine placer deposits that contain approximately 2% xenotime (heavy rare earth ore). Multiple areas along the coast and inland contain monazite (light rare earth ore) resources.

There are 17 rare earth elements (REEs), classified as Light REEs (LREEs) and Heavy REEs (HREEs). 

The resource base of India is, therefore, largely LREE-based, and there is no economically extractable supply of HREEs available. 

The base is also low in grade and radioactive, and the extraction is long, complex, and costly. That's important when measuring India's capacity to develop value chains within the country. The bigger question is not just how much India has, but whether it can be transformed into the materials that industries require.

What India's Strategic Industries Need

Sintered rare earth permanent magnets (REPMs) are vital in applications such as electric vehicles, renewables and wind turbines, electronics, and aerospace and defence. But their requirements are not synonymous with Heavy REEs. The government's current manufacturing push is specifically aimed at sintered NdFeB (neodymium iron boron) magnets, and is based on a manufacturing chain from the NdPr oxide to the final magnet product.

That puts neodymium (Nd) and praseodymium (Pr) in the spotlight. They are both Light REEs, and they play a crucial role in the NdFeB magnet system. However, Heavy REEs like dysprosium and terbium can have more of a special role where magnets are required to perform under challenging high-temperature environments.

The more immediate challenge is whether the country can consistently get and process the materials it needs, particularly NdPr, in quantities that are adequate for mass production. That is not to say that the problem isn't the lack of the "right" rare earths, but rather the challenge of transforming existing resources into industrially useful materials.

Where Does The Value Chain Break?

India has a long rare earths supply chain extending from mining and separation to oxide refining and metal extraction, with the distance increasing further downstream. The government has indicated that there is no industrial-scale facility for manufacturing alloys and magnets; thus, a lower level of capacity in the midstream and downstream.

The industry needs to not only be able to dig out the ore but also be able to create a viable and reliable supply of separated NdPr.

As a senior expert from the Federation of Indian Mineral Industries (FIMI) puts it, “The challenge is not only mining; the entire value chain needs to be developed together, from mining and separation to NdPr metals, alloys and magnets.”

India’s domestic resources can play a major role in the generation of feedstock for Rare Earth Permanent Magnets (REPM) production in the future, but may be inadequate in the early years. As mining, separation, and refining capability grows, imports might continue to serve as a temporary source. 

The economics are also a factor: India has relatively low-grade resources and a complicated extraction process, which makes scaling the chain more difficult.

Resource Wealth Isn’t Supply Chain Security

India's dependence on external supplies is also reflected in its imports, according to a Lok Sabha response. The country's total imports under two rare earth-related HS categories have increased from 1,848 tonnes during 2019-20 to 2,271 tonnes during 2023-24.

In 2023-24, the biggest volumes of rare earth metals, HS 28053000, and rare earth compounds HS 2846, came from China, with a total of 699 tonnes and 780 tonnes, respectively, followed by Japan, Hong Kong, South Korea, Mongolia, the US, and France. 

However, the government data does not identify the specific rare earth elements within these imports, so it's not possible to distinguish between LREE and HREE imports. The limitation is the ability to transform the resources into adequate amounts of processed materials and finished magnets. This is more important as the demand for domestic needs spreads through EV manufacturing, defence, aerospace, electronics and renewable energy.

NdPr is an obvious near-term challenge. As FIMI noted, domestic resources can make a large contribution towards the feedstock needed to implement the proposed REPM capacity, but may be limited in the early stages, leaving imports as a transitional source while domestic capabilities scale.

This creates a structural vulnerability, geological resources do not mean a secure supply of processed materials or magnets. A country may have the mineral resources but still be dependent on imports to meet the needs of its strategic industries.

If India is to bridge that gap, it has to go beyond resource availability and instead ensure that it has processing and manufacturing capacity and a commercially viable domestic supply. That is what the government is trying to fill now.

Government Building The Missing Link

The Centre's flagship downstream measure is the REPM scheme that aims to manufacture an integrated capacity of sintered NdFeB magnets worth 6,000 MTPA at a cost of ₹7,280 crore. The capacity will be distributed among five beneficiaries, each with a maximum of 1,200 MTPA. The scheme is in operation for seven years, with a two-year gestation period and a five-year incentive period (sales-linked), along with a capital subsidy. The government now wants to develop the chain from NdPr oxide to the finished NdFeB magnets.

The scheme has progressed from the announcement stage, as 20 bids were received for the five slots, and technical bids opened on 13 August 2026. In parallel, Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu have been planned, focusing on rare earth mining, processing, research and manufacturing.

The National Critical Mineral Mission covers exploration through processing and recovery, 46 critical mineral blocks have been auctioned successfully by the Ministry of Mines, and 7 blocks of Exploration License, which include two blocks of REE, have also been auctioned by the Central Government.

But Can New Policy Actually Work At Scale?

According to Vishnu Sudarsan, Partner, JSA Advocates and Solicitors, “The real test will be whether they can establish and operate the full value chain from NdPr oxide to metals, alloys and finished magnets at a commercially viable scale.” This will rely upon acquiring a steady supply of a competitively priced NdPr oxide, and there is uncertainty about domestic supply, allocation, imports, and long-term pricing, which could impact project financing and margins. 

Technology is yet another challenge, India is lacking in the expertise for producing high-purity metals and alloys and consistently good-quality magnets.

That might be addressed by foreign investment, joint ventures, and technology partnerships, and long-term offtake agreements with key consuming industries could offer visibility of demand.

The speed of projects could also be influenced by regulation. There can be delays in projects due to multiple land, environmental and operational approvals and restrictions under the Atomic Energy Act may require review with appropriate safeguards. 

Such uncertainty can be reduced by the implementation of a single-window system with transparent timelines and accountability, combined with a comprehensive critical-minerals framework. The success of the scheme should not be assessed only in terms of plants commissioned but also on the basis of raw material security, technology acquired, customer qualification, manufacturing quality, capacity utilisation, and actual sales.

 India has the rare earth resources mostly linked to LREEs, but such deposits are often low-grade and do not necessarily mean that they can be used as industrial feedstock. It can be expensive and complex to extract, and the country's upstream capabilities are currently not on the scale to match those in metals, alloys, and magnets. 

The government's ₹7,280-crore REPM scheme, Rare Earth Corridors and the general critical mineral policy are a change from merely owning resources to developing a full-fledged supply chain.