India’s race for Rare Earths: PLI, mining push, and a long road to tech independence
With rare earth extraction and magnet recycling both tech-intensive and costly, India will need strong foreign collaborations to move ahead
In a major step forward, India on November 26 announced a production-linked incentive (PLI) scheme for manufacturing rare earth permanent magnets (REPM) with an outlay of Rs 7,280 crore for a period of seven years.
These magnets are vital for new-age products ranging from EV and hybrid engines, batteries and other motor parts, renewable energy (solar cells and wind turbines), consumer electronics (display screens), integrated chips, aerospace and defence applications.
Also Read: Rare earths scheme gets Cabinet nod; PM Modi hails historic decision
China’s tantrum didn’t begin this year following US President Donald Trump’s renewed trade war with it but many years ago (more about it later).
Third major initiative
The PLI for REPM manufacturing is the third major initiative in the past couple of years. It began with the auction of 13 mineral blocks in November 2024, including seven blocks in the Andaman Sea. So far, 34 blocks have been auctioned, spreading over Chhattisgarh, Odisha, Karnataka, Rajasthan, Madhya Pradesh, Uttar Pradesh, etc. All such blocks were given exemption from public hearing and environmental clearances in September 2025.
In January 2025, India had launched the National Critical Mineral Mission (NCMM) with an outlay Rs 34,300 crore for seven years to encourage PSUs and private sector companies to acquire critical minerals in India and abroad and develop the entire value chain – from mineral exploration, mining, beneficiation, and processing to recovery from end-of-life products.
Also Read: Centre clears Rs 7,280-crore scheme for rare earth magnet manufacturing
These include rare earth elements (REEs) and also energy critical minerals (ECEs) like lithium, germanium, gallium, indium, selenium, tellurium, etc. (mined as byproducts of lead, zinc, copper, aluminium, and tin).
As part of the mission, India is exploring foreign collaborations to secure overseas resources by signing MoUs with Australia, Chile, Zambia, Peru, etc. It has also engaged with multilateral and bilateral platforms.
What are rare earths, and why are they hard to extract?
The rare earth elements are a group of 17 elements, moderately abundant but dispersed, and not concentrated enough to make their extraction economically viable.
These are rather unpronounceable too: scandium, yttrium, lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium.
Also Read: Amid China logjam, Trump signs rare earths deal with Japan’s Takaichi
In India, monazite, a mineral found in coastal beaches, is the main source of some rare earths, and is found in several states – Andhra Pradesh, Gujarat, Jharkhand, Kerala, Maharashtra, Odisha, Tamil Nadu, and West Bengal.
The Indian Rare Earth Limited (IREL), a “Mini Ratna” PSU, is engaged in mining and processing monazite to extract rare earth compounds – not the rare earth elements. According to the Indian Mines Bureau report of 2022, India has good raw material supply of some (lanthanum, cerium, neodymium, praseodymium, samarium) but not others (dysprosium, terbium, europium).
Ground realities and challenges
Extracting rare earth elements requires the right technology and is a cost-intensive affair. India’s main challenges emerge from the lack of technology and the economic viability. Going by the seven-year timeline for the PLI and NCMM, it can safely be assumed that India is looking at a long road ahead.
Ashim Sharma, Senior Partner at Nomura Research Institute, says India currently lacks the technology to process rare earths and manufacture magnets, which makes it dependent on imports. The dependence will continue for a few more years until the current initiatives stabilise supply. Even for recycling of rare earths, the technology is currently unavailable.
For now, Sharma says Indian companies could look at forging tie-ups with companies that have the technology for rare earth processing. Some supplies could come from the existing sources/countries, or restrictions may lead to importing assembled motors fitted with rare earth magnets for automobiles, from China, Japan, and the US.
Also Read: Rare earths: Deng Xiaoping's vision, China’s advantage, and India’s race against time
As for alternatives, like induction motors (free of rare earth magnets), Sharma says those are mostly being used in two and three-wheelers but not in cars on account of challenges such as torque ripple, efficiency drops, size/weight constraints, etc. However, efforts are also underway to overcome some of these limitations, for the auto sector, through advanced electronic controls.
Veer Sagar, chairman of the Electronic and Software Export Promotion Council (ESEPC), is worried that by the time India is ready, the world may have moved on to newer technologies, as is seen in the case of chip-making. When asked if India delayed taking initiatives, Sagar says the urgency is felt now because of de-globalisation and protectionism, which wasn’t the case earlier.
The effort began much earlier
India’s quest for rare earth minerals didn’t begin in 2024. It began much earlier.
The Ministry of Mines’s 2012 report, “Rare earth and energy critical elements – a roadmap and strategy for India” in July 2012 reviewed the status of exploration, extraction, and processing for REEs and ECEs.
It made three shocking revelations:
1. China monopolised the rare-earth market through low-cost and efficient production, forcing rare earth operations around the world to close down.
2. The Indian Rare Earths Limited (IREL), which was once a leader in the export of rare earth compounds, had to shut down its operation in 2008; it said the supply of rare earth compounds would be resumed from the last quarter of 2012.
3. Over the previous couple of years, China imposed restrictions and curtailed exports by over 30 per cent, citing its growing domestic demands.
Also Read: Trump aide says US counting on India, Europe to counter China’s rare earth control
The 2012 report had almost given up on India.
Its concluding paragraph said that India’s first option was “stockpiling the rare commodity to the extent possible”; the next best being “to reduce its consumption”.
It dismissed the recycling option by saying it was “time consuming”. Instead, it advocated for substituting rare earth magnets with induction motors (“replacing permanent magnet motors with induction motors”).
