Building India’s rare earth magnet ecosystem: A strategic imperative

As China clamps rare-earth exports, India charts a strategic roadmap; domestic mining, homegrown processing, alternative suppliers and R&D, to safeguard its automotive and clean-tech ambitions

New Delhi: In April 2025, China imposed strict controls on seven key rare earth elements (REEs) used in high-performance magnets, accounting for roughly 70 percent of global REE production and 90 percent of processing capacity. This move sent shockwaves through international supply chains, leaving industries from electronics to automotive scrambling for alternatives.

India relies heavily on Chinese REE imports. With existing stocks gradually depleting, electric-vehicle, hybrid and even internal-combustion engine production could face slowdowns as early as July 2025, particularly for premium models that depend on advanced magnet technologies. To cope, automakers may have to pivot toward more affordable mid-range or entry-level vehicles.

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In the immediate term, Indian OEMs are expected to import fully assembled magnet components and sub-systems from China to keep assembly lines running. At the same time, New Delhi is engaging Beijing through diplomatic channels, and watching closely as China temporarily resumes REE exports to top US automakers, a decision that could ease pressure on Indian buyers.

India is evaluating new REE sources in Vietnam, Australia and the United States. While these markets show promise, they currently lack the large-scale processing capabilities needed to meet India’s demand. Parallel efforts are underway to commercialize magnet-manufacturing technologies housed within select public-sector research institutes.

For the medium and long term, experts argue India must build a full-spectrum, homegrown REE ecosystem. Key pillars include: Accelerated exploration of domestic REE reserves, Incentives for private-sector mining and processing, Public-private R&D into REE substitutes and next-gen magnet technologies, Strategic international partnerships and supply-chain diversification, and Creation of national REE reserves to buffer future disruptions

“India’s rare earth element crisis is not merely a supply chain disruption but a strategic wake-up call. This crisis underscores the perils of over-dependence on a single geopolitical actor for critical inputs,” says Madhusudhan Goswami, Assistant Director at CareEdge Ratings. “”Strategic reserves, public-private R&D, and global partnerships must converge into a coherent national strategy.”