As China tightens its grip on global rare earth supplies, imposing fresh restrictions on rare earth exports critical to defense and clean energy sectors, global powers are scrambling for alternative sources. The United States, heavily reliant on Chinese supplies for rare earth elements (REEs), has been particularly alarmed. Amid this disruption, India is being increasingly viewed as a potential strategic alternative and New Delhi is making moves to seize the opportunity.
Rare earth elements; such as neodymium, dysprosium, and terbium, are vital for a wide range of applications, from electric vehicles (EVs) and wind turbines to missile guidance systems and semiconductors. Currently, China controls over 60% of global rare earth production and nearly 90% of rare earth processing capacity, giving it a commanding lead over the rest of the world. However, geopolitical tensions and growing export controls have triggered fears of a global supply crunch.
In 2024, Beijing enforced a series of bans on rare earth exports citing “national security interests.” The move, widely seen as retaliation against Western trade restrictions, has thrown global supply chains into turmoil. Countries including the U.S., Japan, and key EU states are now aggressively scouting for alternative supply chains. India, with over 6% of the world’s rare earth reserves, is suddenly in the spotlight.
“India could be the next major player in the rare earth market if it plays its cards right,” said global trade analyst Deepak Sharma in a recent policy forum. “The geopolitical moment is ripe for India to emerge as a non-aligned, resource-rich alternative.”
India’s bastnasite and monazite deposits, located largely in Odisha, Kerala, Tamil Nadu, and Andhra Pradesh, have long remained underutilized due to regulatory constraints and lack of processing infrastructure. However, this may be about to change. The Indian government is actively considering policy reforms to allow greater private sector participation and foreign investment in rare earth mining and processing.
Recent Indo-U.S. trade talks, which included discussions on energy and critical minerals, suggest that the U.S. may look to India not just as an energy partner, but also as a rare earth collaborator. India has also initiated exploratory dialogues with Australia and Japan on joint ventures in REE supply chains and technology transfers.
With global powers seeking to diversify supply chains away from China, the rare earths race is becoming a strategic imperative. If India can streamline its mining policies, attract foreign partners, and build integrated value chains, it could become a pivotal player in the new critical minerals economy.
As Jeffrey Sachs put it, “India doesn’t need to beat China—but it can become the world’s reliable Plan B.”
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