[Answered] China’s dominance in the rare earth minerals market and its imposition of export restrictions have raised concerns about strategic vulnerabilities across the globe. Analyze the geopolitical and economic implications of these restrictions for major economies, including India. In this context, examine India’s initiatives to secure its rare earth supply chain and assess their effectiveness in mitigating potential disruptions.

Introduction

Rare earth elements (REEs) are critical to modern technologies—ranging from defense systems to green energy (e.g., wind turbines, EVs). China controls over 60% of global REE production and over 85% of refining capacity. Its decision in 2024 to impose stricter export controls on strategic REEs like gallium and germanium has reignited global fears of supply disruptions.

Geopolitical and Economic Implications

1. Global Strategic Vulnerabilities:

• US & EU dependence: The US imports ~74% of its REEs from China; the EU has included them in its list of critical raw materials.
• China can weaponize REEs in tech and trade wars, as seen in the 2010 Japan dispute, where Beijing cut off supplies over a territorial conflict.

1. Green Energy Transition Risk:

• REEs like neodymium and dysprosium are vital for wind turbines and EVs.
• Export restrictions could derail global net-zero goals by making clean tech costlier.

1. Industrial & Military Setbacks:

• REEs are essential for semiconductors, lasers, jet engines, and missile guidance systems.
• Nations with strong defense-industrial bases face production bottlenecks.

India’s Vulnerabilities and Responses

India holds ~6% of global rare earth reserves, mainly monazite sands in coastal areas (Odisha, Kerala, Tamil Nadu). However, India contributes only 1% to global supply, due to policy, processing, and technology constraints.

India’s Key Initiatives

1. Policy & Institutional Reforms:

• Amendments to Atomic Minerals Concession Rules (2021): Eased private sector participation in rare earth mining.
• Draft Critical Minerals List (2023): Identified 30 key minerals including REEs for national security and energy goals.

1. Strategic Partnerships:

• India-Australia Critical Minerals Partnership (2022): Secures REE supply chains.
• QUAD Critical Minerals Initiative: Promotes REE cooperation with Japan, US, and Australia.

1. Indigenisation Efforts:

• IREL (India) Ltd. modernization for monazite processing.
• Collaboration with CSIR and DRDO for REE-based permanent magnet development.

Assessment & Way Forward

While India has taken important first steps, gaps remain:

• Processing bottlenecks, lack of refining tech, and monopoly of IREL limit output.
• Need for a Rare Earth Policy 2.0 focusing on exploration, private R&D, and circular economy.

Conclusion

China’s strategic use of REEs underscores the urgency for supply chain diversification. India must scale up extraction, invest in refining tech, and forge deeper global partnerships to ensure critical mineral sovereignty. A resilient REE strategy is vital for India’s energy transition, defense preparedness, and strategic autonomy.