Building a resilient REE supply chain for India
India requires a multi-pronged, security-focused policy approach in both its domestic and foreign policy to create more resilient, trusted supply chains for minerals, as well as build domestic capacity. This brief aims to provide short, medium and long-term policy options that the Indian government can undertake to mitigate supply chain disruptions, build resilience and develop sovereign capabilities.
China’s recent licensing and export controls on rare earth elements (REEs) and finished magnets have significantly disrupted Indian supply chains, impacting critical sectors including automobiles, defence, clean energy and electric vehicles (EVs). The revised Chinese approach demands detailed end-use disclosures and client declarations, leading to global concerns about the transfer of sensitive information. Further, companies must submit a declaration that the products will not be used in defence equipment, creating a challenge for India’s defence production requirements. The new export control mechanism is also unique in that, for the first time, they were announced through a formal bureaucratic enforcement structure, unlike previous instances where informal measures were used.​​​
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The current Chinese move is not a one-off instance. Since 2010, China has repeatedly used its dominance to disrupt critical minerals markets, create price volatility, and use measures such as export controls as economic coercion in cases of geopolitical contestations (such as those with the US, Japan and India). Hence, China’s dominance in critical minerals poses not only a short-term challenge but also a larger strategic threat to India, presenting a long-term geopolitical constraint to India’s rise and economic growth. Import dependence could potentially create chokeholds for India’s nationally critical and future growth sectors, including defence, semiconductors, clean energy, automobiles, telecommunications, nuclear energy, and health.​
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Over the past two decades, China has consolidated its position in critical minerals and REE supply chains, producing over 90% of global rare earth magnets. India’s demand for neodymium is expected to grow 48% by 2050, showing a long-term need for REEs. The International Energy Agency estimates that global demand for neodymium could reach 850,000 tons by 2030, exceeding the projected supply by 250%. India’s total requirements of neodymium alone for Solar PVs, Wind Turbines, and BESS alone are expected to rise from 223 tonnes in 2025 to 2,201 tonnes by 2047. While there are significant R&D advances towards REE-free magnets, they are not close to commercialisation yet, making a reliable neodymium magnet supply indispensable to India’s growth ambitions in the medium to long term.​​​​
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Project Leads:
Shyam Krishnakumar
Titiksha Vashist