India’s resolve to reduce country’s dependence on China for critical minerals

Introduction

India is moving swiftly to reduce its dependence on China, a nation that has long dominated the supply, processing, and export of these essential resources, as securing access to critical minerals has become a difficult challenge for India’s economic and strategic ambitions.

Strategic minerals: The backbone of future technologies

Rare earths and critical minerals such as lithium, cobalt, and neodymium represent the foundation to a broad spectrum of modern technologies. Electric vehicles, renewable energy systems, advanced defence hardware, and sophisticated electronics all depend on a steady supply of these materials.

Chinese dominance in critical minerals

According to the Institute for Energy Economics and Financial Analysis (IEEFA), China accounts for about 80 percent of the world’s rare earth refining, and more than 90 percent of its permanent magnet production which underlines the global reliance on Chinese industry.

Forging international partnerships for mineral security

India, in recent times, has launched an array of diplomatic and commercial initiatives aimed at diversifying its mineral supply chains, including:

During the May 2026 Quad foreign ministers’ meeting in New Delhi, India and the United States announced a bilateral pact to secure access to critical minerals and rare earths, agreement, part of a broader Quad Critical Minerals Initiative, which saw India, the US, Australia, and Japan collectively commit up to 20 billion dollars in public and private investment for:

• Mining;
• Processing, and;
• Recycling projects.

External Affairs Minister S Jaishankar, while highlighting the significance of the move, hoped the framework would deepen cooperation across the entire supply chain.

India has also inked agreements beyond the Quad with:

• The State-backed Khanij Bidesh India Limited (KABIL) signing a deal with Argentina’s CAMYEN SE in January 2024 for exploration and development of lithium brine blocks, marking India’s first overseas lithium mining venture;
• Memoranda of Cooperation on critical minerals signed with Japan and Australia, expanding India’s collaboration into lithium and cobalt projects.
• Talks with Myanmar resulting in commitments to closer engagement on rare earths, according to India’s Ministry of External Affairs.

China’s grip on processing and export: The core vulnerability

China’s dominance is most pronounced in processing and refining. In 2023, China introduced export controls on critical minerals and related technologies, increasing concerns about supply disruptions. Although some restrictions were eased after high-level talks in late 2025, this highlighted the risks inherent in over-reliance on a single supplier. US Secretary of State Marco Rubio had also warned in the Quad meeting that, allowing a single country to monopolise access to such key resources could threaten the economic and strategic interests of others, especially in times of political tension.

India’s dependence on China for Critical minerals

While India possesses significant reserves of rare earths, its processing capabilities remain limited. Even as India sources key minerals globally, the country is still highly dependent on Chinese supply. According to IEEFA data, China supplied between 60 and 81 percent of India’s permanent magnet imports by value between 2022-23 and 2024-25, and an even higher share by quantity, while for rare earths themselves, imports from China made up more than 45 percent of India’s total over the past decade.

In the opinion of observers, the strategic choke point or bottleneck is not in mining, but in the ability to convert raw ore into usable materials and finished products.

Building domestic processing: Ambition versus capability

Recognising the urgency of boosting domestic processing capacity, the Union Cabinet in November 2025 approved a scheme worth 7,280 crore rupees aimed at establishing 6,000 metric tonnes of integrated NdFeB (neodymium) magnet manufacturing capacity. At present, the country’s current rare earth refining capability remains below 25 percent of domestic demand, according to an estimate, while the commercial-scale output is yet to materialise.

Energy analyst Kaira Rakheja of IEEFA (Institute for Energy Economics and Financial Analysis) has argued that developing a robust processing ecosystem requires more than capital investment & that for converting Mineral resources into Strategic assets:

• Technology transfer;
• Environmental management, and;
• The creation of downstream industries, are essential.

It is opined that, if India can leverage international partnerships for skills development and technology sharing, its goal of becoming a major processing hub could become more realistic over time.

Regulatory hurdles and the role of state enterprises

India’s primary rare earth resource is Monazite sand found along the coasts of Kerala, Odisha, Andhra Pradesh, and Tamil Nadu. However, it contains radioactive elements like thorium and uranium and is classified as a prescribed substance under the Atomic Energy Act, with only state-run entities such as Indian Rare Earths Limited (IREL) being permitted to mine and process these sands, limiting private sector participation and slowing commercial scale-up, it is opined.

India’s aspirations and current capabilities

It is opined, lack of industrial-scale facilities for converting rare earth oxides into metals, alloys, and finished magnets underscores the gap between India’s aspirations and current capabilities. Building such complex supply chains according to them is a decades-long process that requires:

• Sustained commitment, and;
• Investment.

Building resilience through cooperation and innovation

As the world’s energy transition accelerates and advanced manufacturing becomes more critical to economic security, mineral supply chains are no longer, just an industrial concern, but a matter of national strategy. The future road for India therefore, according to them lies in:

• International cooperation;
• Domestic policy reform, and;
• Technological innovation.

While the Quad alliance and other bilateral initiatives offer a platform for shared investment and knowledge transfer, India must also address:

• Domestic regulatory bottlenecks, and;
• Foster a vibrant ecosystem for processing and advanced manufacturing, it is opined.

Epilogue

India’s bid to break the stranglehold of Chinese supply chains in critical minerals is still in its early stages. However, with coordinated global partnerships and focused investment in building processing capacity, India is trying to reduce its dependence on China & position itself to become a crucial player in the world’s mineral economy, a move with profound implications for:

• Clean energy;
• Defence, and;
• Technological self-reliance.

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