Despite holding some of the world’s largest reserves of rare earth elements (REEs), India’s chances of tapping their full potential remain remote. Deep-rooted concerns over radioactive contamination and national security are prompting the government to retain tight control over mining operations, significantly limiting the private sector’s role in developing this strategically vital resource.
Rare earth elements, particularly those used in high-performance magnets for electric vehicles, wind turbines, and defence equipment, are often found mixed with radioactive materials like uranium and thorium. This association has made the mining and handling of these minerals a sensitive matter. In a recent high-level meeting involving the department of atomic energy (DAE), Niti Aayog, ministry of mines, and ministry of heavy industries, officials reaffirmed that extraction of REEs linked to radioactive substances would continue under government supervision.
The government’s position is backed by legislation. The 2023 amendment to the Mines and Minerals (Development and Regulation) Act specifies in Part D of its first schedule that private players can only mine REE deposits free from uranium and thorium. “The mining of REE minerals containing radioactive content is best handled by state-owned agencies to mitigate risks and ensure national security,” said an official familiar with the deliberations.
Currently, public sector enterprise IREL, under the department of atomic energy, oversees mining and processing of REEs from monazite and xenotime-bearing sands, both known to contain radioactive traces. IREL operates an extraction plant in Chhatrapur, Odisha and a refining facility in Aluva, Kerala, and is India’s only significant REE producer. Last year, it mined 2,900 metric tons of rare earth materials, just 0.74% of global output, while India’s total reserves are estimated at a substantial 6.9 million metric tonnes.
The Atomic Minerals Directorate for Exploration and Research (AMD) is actively exploring new REE deposits along the country’s coasts, rivers, and inland terrains, but the pace of development remains slow. Moreover, India’s REE deposits are often low-grade, and separating them from radioactive content poses technical and environmental challenges.
According to analysts, this cautious approach stands in stark contrast to the urgency of the current global rare earth supply crunch. China, which controls over 60% of global REE mining and nearly 90% of refining, has introduced new export licensing norms that have tightened global availability. These restrictions, part of escalating trade tensions with the US, are having a ripple effect worldwide and have pushed India’s auto industry into a state of crisis.
Maruti Suzuki, the country’s top passenger vehicle manufacturer, has cut production targets for its electric e-Vitara model by two-thirds for the April–September period, citing difficulties in sourcing rare earth magnets. Two-wheeler majors, Bajaj Auto and TVS Motor have also warned of production halts by mid-year due to fast-depleting inventories.
India imported over 53,000 metric tonnes of rare earth magnets in FY25.
Industry stakeholders have suggested that, as an interim solution to the current squeeze, the government should allow imports of fully assembled motors instead of rare earth magnets, even at higher costs, to keep assembly lines moving. Easing domestic value-addition requirements under incentive schemes like the auto PLI, has also been suggested.