Can India Break China's Grip on Rare Earths?

In a world racing toward clean energy, electric vehicles, and advanced defence systems, the competition for rare earth elements has increased. These 17 metallic elements are the invisible backbone of modern technology. While India holds around 6% of global reserves, it produces barely 1% of the world’s supply. In contrast, China controls 90% of global output and 85% of processing capacity.

India plans to change that equation. The government plans to nearly triple its rare earth magnet incentive program to $788 million, or ₹6,600 crore, to spur domestic manufacturing and reduce its reliance on Beijing.

Why Rare Earths Matter

Rare earths are essential in producing EVs, in wind turbines, solar panels, smartphones, and other emerging defense technologies. Actually, their remarkable magnetic and luminescent properties make them crucial for anything from missile-guidance systems to medical devices.

As the fourth-largest in renewable energy capacity globally, India needs these materials to achieve its ambition of net-zero by 2070. Demand for rare earth magnets in electric vehicles and renewable energy will double by 2030, thus creating a huge opportunity for domestic production. https://www.businesstoday.in/latest/economy/story/india-fires-a-788-mn-shot-at-china-in-fight-to-break-rare-earth-stranglehold-500514-2025-11-03

The Strategic Stakes

Importantly, this dependence upon supplies from across the border with China carries a strategic and economic risk. Disruptions in supplies or export bans for critical components can bring down whole industries-from energy and defence to electronics. Building indigenous capacity is thus not merely an issue of economics; it is one of national security and strategic autonomy.

It will also generate many thousand employment opportunities and attract foreign investment in the development of the rare earth sector. The Indian market, valued at US$9 billion in 2024, is likely to show rapid growth as the country strengthens its clean energy infrastructure.

The $788 Million Magnet Plan

The new incentive scheme aims at localizing production of NdFeB magnets with a capacity build-up to 6,000 tonnes per year by 2030. These are powerful magnets used in electric vehicle motors, wind turbines, and high-tech electronics.

This is likely to be attended by state-owned enterprises and private players, with a view to production-linked and capital subsidies in support. The government is also promoting international mining partnerships and exploring alternative motor technologies to reduce rare earth dependency in the long term.

However, many challenges still remain. Mining and refining are capital-intensive with lengthy project cycles; there is also an environmental concern, particularly regarding the safe disposal of radioactive waste from monazite-rich deposits. It needs continuous investment in more advanced technology to prevent India’s growth from stalling well before it truly scales.

Policy and Institutional Push

To bridge this gap, the ₹16,300 crore National Critical Mineral Mission was rolled out by the government in 2025 for mapping mineral reserves, ensuring ease of clearances for mining, and incentivizing private sector participation.

Meanwhile, the ₹7,350 crore PLI for rare earth magnets targets a three-fold increase in magnet manufacturing capacity in India by 2030. Centres of Excellence at IISc Bengaluru and C-MET Hyderabad facilitate R&D, innovation; new recycling initiatives recover rare earths from e-waste – a sustainable step toward the circular economy.

Can India Challenge China?

Subsidies, scale, and technological expertise built over decades still maintain China’s control of the rare earth supply chain. However, a steady policy push from India, international collaborations-especially through the Quad and Minerals Security Partnership-and industrial incentives undergird India’s intent to compete seriously in this domain. It will be a technological, consistently funded, and ecologically responsible journey ahead.

In the words of Nobel laureate Joseph Stiglitz, “The key question for developing economies is not what they can produce today, but what they can learn to produce.”

The clear lesson for India, however, is that the route to securing its energy and defence future lies in mastering the art of producing the minerals powering the modern world.

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