In July 2025, the Indian government unveiled a ₹1,345 crore (approximately USD $160 million) initiative to develop domestic production of rare-earth magnets, a critical step in reducing dependence on Chinese imports. The announcement comes in the wake of China’s decision to tighten export controls on rare-earth magnets, which are essential components in electric vehicles, wind turbines, electronics, and military applications. Indian automotive manufacturers like Mahindra & Mahindra and parts supplier Uno Minda have shown strong interest in participating in this effort, signaling a private-sector alignment with national strategic goals. The policy aims to establish local supply chains that can support both industrial growth and national security.
India currently holds about 8% of the world’s rare-earth reserves, making it the fifth-largest holder globally. However, its extraction and processing capabilities remain underutilized. Indian Rare Earths Ltd (IREL), a state-run company, has historically produced ore mainly for the defense and atomic energy sectors. In response to recent supply chain disruptions, IREL plans to halt its rare-earth exports and shift focus toward scaling up domestic refining and value-added manufacturing. This pivot represents a significant shift in resource management, aiming to internalize more stages of the rare-earth value chain and build resilience against external market shocks.
As India moves to expand rare-earth mining and magnet production, it must also prioritize its social license to operate (SLO). Rare-earth extraction often involves environmental risks and can impact local communities through land use, water pollution, and habitat disruption. To ensure long-term viability and public trust, the government and private partners must engage stakeholders transparently, invest in environmentally responsible technologies, and deliver tangible benefits to affected communities. By embedding social and environmental safeguards into its industrial strategy, India can not only reduce its strategic vulnerabilities but also foster inclusive, sustainable growth in its critical minerals sector.