Blitz Bureau
Rare earth elements (REEs) — a group of 17 chemically similar elements including lanthanides, scandium, and yttrium — are essential to modern technologies. From electric vehicle motors (via neodymium‑iron‑boron, NdFeB, magnets), wind turbines, and smartphones to military systems, medical imaging, and aerospace technologies, REEs form the backbone of high-performance material supply chains.
Despite their name, REEs are not geologically rare. However, their extraction and separation are technologically intensive and environmentally costly. Over the past two decades, China has secured a commanding lead: it mines roughly 70 per cent of the world’s REEs and processes around 90 per cent of rare earth magnets. This dominance creates a strategic choke point — when China tightens control, industries worldwide — including India — feel the strain.
India’s resource position: Rich, yet untapped
India has one of the world’s largest REE reserves, estimated at around 6.9 million tonne — compared to China’s 44 million tonne and Brazil’s 21 million tonne. A high percentage of the world’s beach and sand minerals conducive to REE are in India. Major deposits are located along the Odisha, Kerala, Tamil Nadu, Gujarat, and parts of Karnataka, Uttar Pradesh, and Chhattisgarh.
India Rare Earths Ltd (IREL, a public sector undertaking under the Department of Atomic Energy), operates key mining and processing facilities at Oscom, Odisha, where monazide sand is processed into rare earth chlorides. Second facility is RED, at Aluva in Kerala where high purity oxides like La, Ce, Nd-Pr, Sm Gd and Y are produced through chemical processing. The third facility is the REPM plant at Vishakhapatnam which was launched in May 2023 and it uses samarium-cobalt chemistry to produce up to 3 tonner per year of magnets.
Yet, challenges remain. The processing technology for high‑purity NdFeB magnets is underdeveloped. IREL’s mid-stream capacity (oxide → metal → magnet) is limited. Domestic mining runs well under capacity, and private participation remains low.
Deepening dependence on China
Because of the lack of domestic magnet‑making capability, Indian companies have become increasingly dependent on China. India’s permanent magnet imports nearly doubled from 28,700 tonne in FY24 to 57,000 tonne in FY25, 93 per cent sourced from China.
But their value rose by only 12 per cent, indicating China’s aggressive price cuts. In FY24, about 460 tonne of magnets were imported, with FY25 forecasted at 700 tonne.
Indian EV, automobile, wind-turbine, electronics, audio, medical, and defence sectors rely almost exclusively on Chinese magnets. This dependency leaves India’s green transition and defence modernisation vulnerable to external disruption — and to geopolitical risk.
Beijing’s leverage play
In April, China implemented a revised export‑licensing regime impacting REEs, especially Nd, Pr, Dy, Tb, Y, Gd, Lu — key elements for powerful magnets. Licences now require end‑use certificates signed by foreign ministries, causing delays of weeks or months, particularly for applications from India.
As a result, automakers now report only four-six weeks of magnet inventory, with production at risk by July 2025. Companies like Maruti, Bajaj, and audio-electronics (21,000 jobs endangered) have sounded alarms. However, Tata Motors has downplayed the immediate risk but noted ongoing supply monitoring.
Beyond supply logistics, this is part of a broader economic pressure campaign. China has also delayed exports of fertilisers and tunnel-boring machines, even while engaging in diplomatic dialogue.