Rare Earth: India Strikes It Rich, But the Pay-off is Years Away

This week’s headline is cause for celebration, but also for caution. India has announced the discovery of significant rare earth element (REE) deposits in Rajasthan’s Jalore and Barmer districts. With mining auctions expected to begin soon, the news was met with the sort of national optimism usually reserved for oil strikes or major defence deals. These minerals—neodymium, praseodymium, dysprosium, among others—are essential ingredients in the technologies of the future: electric motors, wind turbines, missile systems and smartphones.

Coming at a time when nations are scrambling to secure critical mineral supply chains, India’s find appears to offer strategic leverage and economic promise. But beneath the excitement lies a more sobering reality: discovering rare earths is, relatively speaking, the easy part. The hard part—one that separates global leaders from geological footnotes—is what comes next. For all the attention paid to extraction, it is processing, refining, and fabrication that create value and power. And here, India remains woefully underprepared.

While India holds an estimated 6.9 million tonnes of REE reserves—among the largest globally—it still contributes less than 1% of global refined output. What little it produces rarely makes it beyond the intermediate stage of ore concentration. The ability to convert these raw materials into finished, high-purity products is almost entirely absent. It is this missing capability—not a lack of minerals—that explains why India still imports most of the magnets, components and alloys it needs, often from the very country it hopes to compete with: China.

Sehul Bhatt, Director – Research, Crisil Intelligence, says India’s rare earth ambitions are caught between geology and viability.
“We have around 7% of global reserves, but low commercial viability and shallow exploration levels have kept miners at bay. Imports touched $17.85 million in 2024. While global tie-ups show intent, domestic auctions are struggling, and critical processing capabilities remain missing.”

The Rajasthan discovery, therefore, is not a triumph of industrial self-reliance. It is an invitation to build one.

Here is skinny on the materials that are now ruling minds and markets.

Q: Why is processing rare earths so much harder than discovering them?
Because geology is only the beginning. Processing rare earth elements requires a series of tightly controlled chemical procedures, starting with concentrating ore from fractions of a percent to usable levels, and ending with high-purity separation of chemically similar elements. Each step is energy-intensive, capital-heavy and fraught with environmental hazards. Unlike oil or iron, rare earths are not extracted as standalone elements. They are bonded within complex mineral structures, and each element—of which there are more than fifteen—must be painstakingly separated using solvent extraction and ion exchange methods. The expertise to do this at scale exists in very few countries. India is not yet among them.

Q: If India has the reserves, why hasn't it developed processing facilities?
In part because the incentives have not existed. For decades, the global rare earth supply chain has been dominated by China, which offered high volumes at low costs, often undercutting competitors. Few countries—including India—saw value in investing in expensive processing infrastructure when imports were cheap and reliable. Moreover, India’s own processing capabilities were constrained by strict environmental regulations, a lack of commercial-scale pilot projects, and the virtual absence of private participation in the sector. The Department of Atomic Energy retained control over most REE-bearing minerals due to their radioactive associations, further limiting experimentation and scale.

Q: Why does China dominate this space?
Because it made a strategic decision, decades ago, to do so. From the 1980s onward, China invested heavily in rare earth mining and, more importantly, in downstream processing and manufacturing. It was willing to absorb environmental damage, subsidise uneconomic ventures, and corner the global market by exporting at below cost. As other nations exited the business, China quietly built a vertically integrated industry—controlling everything from raw material extraction to high-performance magnets. Today, it processes over 85% of the world’s rare earths and manufactures nearly 90% of the world’s neodymium magnets. India, by contrast, has no commercial magnet manufacturing capacity of note.

With inputs from Himanshu Ojha

Q: Is India doing anything now to change this?
It is beginning to. The recent discovery has catalysed policy movement. The government has opened up the critical minerals sector to private investment, committed to auctioning rare earth leases, and launched production-linked incentive (PLI) schemes aimed at encouraging downstream industries. Strategic partnerships are being explored with countries like Japan, the United States, and Australia to enable technology transfer. A new Critical Minerals List and the National Mineral Exploration Trust are helping coordinate efforts. But these steps remain embryonic. Without long-term policy certainty, commercial viability, and significant investment in processing infrastructure, India’s ambitions will remain stuck at the minehead.

Q: How long will it take India to build a complete rare earth supply chain?
Most experts agree that it will take at least five years for India to begin producing high-purity rare earth oxides at a meaningful scale. Building a complete “mine-to-magnet” value chain—from ore to finished component—could take a decade or more, assuming consistent investment, regulatory support and access to technical expertise. And even that presumes success in building environmentally sound waste management systems to handle the toxic and radioactive by-products of processing. Without those, domestic opposition and litigation could stall progress long before the first magnet rolls off the production line.

The road from Rajasthan to rare earth independence will not be short. It will require not just minerals in the ground, but capital in the bank, engineers in the lab, and a coherent industrial strategy that survives political cycles. It will require clarity about what to build domestically and what to import, when to partner and when to protect, and how to scale without surrendering environmental safeguards.

Today’s headline reminds us that India is blessed with geological luck. But in the age of clean technology and critical materials, industrial advantage does not come from what a country owns—it comes from what it can make. Rajasthan may have given India a spark. Whether it becomes a flame depends on what follows.

With inputs from Himanshu Ojha