In 1992, Deng Xiaoping made a bold statement about the world’s rare earth resources, declaring, “The Middle East has oil, China has rare earths.” Fast forward thirty years, and that statement has evolved into a major geopolitical issue. India has been actively working on addressing this situation.
In the 2026–27 Union Budget, the Indian government introduced Dedicated Rare Earth Corridors across states like Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. They also announced significant investments, including the ₹7,280 crore Rare Earth Permanent Magnet (REPM) scheme. This represents a groundbreaking shift in India’s approach to critical minerals, aiming for self-reliance.
A Shift in the Balance of Power
China currently dominates the rare earth market, controlling about 70% of global mining and an astonishing 90% of refining. This monopoly poses a serious risk. For example, in 2025, India imported around $221 million worth of rare earth elements from China, which represented up to 90% of its supplies. Notably, India has the world’s third-largest reserves of rare earths, estimated at 6.9 million tons, but produces less than 1%.
Experts from Kotak Mutual Fund have pointed out that this discrepancy is a result of policy failures, not geological ones. They stress that India needs to act quickly to optimize its mineral resources.
The Warning Signs
In April 2025, China imposed export controls on rare earth elements in response to U.S. tariffs, leading to a dramatic drop in shipments. This move sent shockwaves through various sectors, including automotive manufacturing in India, Germany, and the U.S. The International Energy Agency described these actions as significant escalations, highlighting the vulnerabilities that India has faced due to its reliance on Chinese resources.
India’s Strategic Response
The Modi government has taken decisive steps to address these vulnerabilities. They have rolled out a comprehensive policy initiative to break away from decades of regulatory inertia around rare earth mining and processing.
The REPM scheme is designed to encourage domestic production by offering incentives linked to sales. Capital subsidies are also part of the plan, making it easier for Indian industries to compete against the long-established Chinese market.
Mapping the Future
The newly planned Rare Earth Corridors leverage existing infrastructure to tap into India’s rich mineral deposits. These corridors are strategically located to optimize extraction and processing while supporting research and manufacturing.
India’s approach also involves securing mineral assets overseas through partnerships with countries like Australia, which is a major player in rare earth production. Being part of the Minerals Security Partnership with nations like Japan and Canada further strengthens India’s position against Chinese dominance.
Facing Challenges Head-On
Despite these initiatives, challenges remain. India’s investment in rare earth research and development is significantly lower compared to China, and there’s a critical shortage of skilled workers in this field. Additionally, environmental concerns around coastal mining practices need careful management to balance economic gains with ecological protection.
A New Era of Sovereignty
The combined investment in the National Critical Minerals Mission and the REPM scheme signals India’s commitment to transition from reliance on foreign resources to becoming a self-sufficient producer. With the global demand for rare earth magnets rising—driven by electronics, electric vehicles, and renewable energy—this move is not just about economics; it’s about national sovereignty.
As India begins to produce and refine its own rare earth magnets, it will mark a significant milestone. The effective management of these resources could redefine India’s role in global technology and defense.
India’s journey toward rare earth self-sufficiency is much more than an industrial upgrade; it’s a crucial step toward securing its place in a rapidly changing world.
For more on India’s mineral policies, you can check resources like the World Bank.
