India, possessing significant rare earth reserves and production technology, has the potential to disrupt China’s dominance in critical minerals essential for various industries. Currently, China controls around 90% of rare earth separation and processing, as well as 93% of magnet manufacturing, giving it strategic leverage in global trade. This monopoly has led to instances where China used rare earth exports as a bargaining tool in geopolitical disputes.
The dependence of India on China for 80-90% of its magnets and related materials has exposed vulnerabilities, especially during trade disputes. Despite India’s substantial rare earth reserves, the sector has been underdeveloped, with limited production mainly by state-owned enterprises. The lack of private investment has hindered refining capacity and prevented India from fully utilizing its resource base.
To address these challenges, India initiated the National Critical Minerals Mission to enhance domestic exploration, processing, and value addition in January 2025. The country is opening up critical mineral exploration to private companies and strengthening partnerships with international allies like the United States, Japan, Australia, and European countries through initiatives such as the Minerals Security Partnership (MSP).
India’s strategic position in South Asia is evolving amidst competing connectivity projects like China’s Belt and Road Initiative and the US-led Indo-Pacific frameworks. The region’s infrastructure investments and connectivity projects are increasingly intertwined with strategic competition, including the utilization of rare earth resources. India’s regional initiatives like the SAGAR and MAHASAGAR doctrines emphasize cooperation in maritime security, disaster relief, sustainable development, and economic connectivity across the Indian Ocean and South Asia.
India’s combination of resource abundance, technological capabilities, and geopolitical positioning uniquely positions it to lead in developing regional value chains for rare earth extraction and processing. By leveraging these strengths, India can reduce reliance on external powers and enable South Asian states to actively participate in global supply networks. Strengthening domestic capacity, fostering international partnerships, and promoting regional cooperation can solidify India’s role as a stabilizing force in the region.
