From rocks to riches: India’s unfinished critical minerals story

In April 2025, Indian automakers, component manufacturers, home-appliance makers and clean-energy industries faced a sudden threat: China began tightening exports of certain rare-earth products. It severely disrupted automobile production and sent ripples through other manufacturing sectors, where assembly lines had to wait on rare-earth magnets to keep components moving.

That episode exposed a vulnerability in the supply chain that is easy to miss. While China accounted for 94% of global permanent-magnet production in 2024, according to the International Energy Agency (IEA), India’s domestic permanent-magnet production capacity remains limited, and imports meet much of its current demand.

But magnets are only one part of a much larger problem.


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India has significant critical-mineral resources in the ground, but the bottleneck lies in suitable commercial extraction, processing raw ore into refined, high-purity material and then turning those into products such as permanent magnets.

In the mineral industry, these processing and refining stages are commonly described as the “midstream” of the supply chain.

Until India closes that gap, its electric vehicle (EV), renewable energy, and semiconductor ambitions will remain exposed to supply disruptions and policy decisions of other countries.

Pradeep Singh, Additional Director General, Policy Support System, Geological Survey of India, told ET Online that India’s critical-mineral strategy must be viewed as an integrated effort spanning geological discovery, resource assessment, mining, beneficiation, processing, recycling and value-added manufacturing.

A supply chain built on imports

Ministry of Mines data show that India relied entirely on imports for lithium, cobalt and nickel in FY23, while overseas supplies accounted for about 93% of its copper ore and concentrate needs.

According to a report by the Institute for Energy Economics and Financial Analysis (IEEFA), supplier shares vary by mineral and product category. Finland supplied nearly 60% of India's cobalt oxide and hydroxide imports in FY25. Ireland accounted for close to 40% of lithium carbonate imports, while Chile supplied over 41% of lithium oxide and hydroxide.

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Tanzania accounted for more than half of India's copper ore and concentrate imports, while Chile was the largest supplier across the category, according to IEEFA.

A Press Information Bureau (PIB) release said that between 2022 and 2025, China supplied nearly 60-80% of India's permanent-magnet imports by value and 85-90% by quantity.

India has also sought to diversify its sources. It signed a rare-earths agreement with Brazil in February 2026 and agreed to expand critical-minerals cooperation with Uzbekistan in August 2026. It has also signed mineral agreements with Argentina, Australia and Japan, and explored or pursued cooperation with Germany, Canada, France, the Netherlands, Peru and Chile.

According to a Reuters report, India is also nearing a preliminary pact with Russia on critical minerals.

One supply chain behind a phone, a car and a chip

Rare-earth magnets sit inside an EV’s motor, while its battery relies on minerals such as lithium, cobalt, nickel and graphite. Wind turbines also use magnets, and smartphones use them in small motors and speakers.

Chipmaking, meanwhile, relies on a different set of critical minerals and materials.

India is looking to build capacity across these supply chains. The Union Cabinet approved Semicon 2.0 in July to support chip design and the machines and materials behind manufacturing. The first phase approved 12 manufacturing units, while the second phase expands the programme's focus on the wider semiconductor ecosystem.

According to Singh, GSI is also expanding exploration beyond conventional battery minerals to include elements important for electronics, solar energy, defence and advanced manufacturing.

The riches-and-refineries gap

India’s critical-mineral resource bases are spread across several states.

PIB reported 13.15 million tonnes of monazite containing an estimated 7.23 million tonnes of rare-earth oxides, spread across states from Odisha and Kerala to Gujarat and Jharkhand. It added that the GSI has identified 482.6 million tonnes of rare-earth ore resources across 34 exploration projects.

That figure is ore, not finished rare-earth material, and the difference is the whole story.

Singh cautioned that the approximately 482-million-tonne estimate is largely attributable to beach-sand resources and does not establish how much material is commercially viable or ready for mining.

Grade alone is insufficient to determine a deposit’s potential: mineralogy, mineral associations, liberation characteristics and beneficiation performance also influence how much valuable material can be recovered.

GSI is investigating deposits beyond beach sands, including the Siwana Ring Complex in Rajasthan, which offers potential for heavy rare-earth elements.

“Deloitte’s analysis identifies midstream processing, refining and conversion into high-purity materials as one of the binding constraints in India’s critical-mineral value chain,” Shailesh Tyagi, Partner and Sustainability & Climate Leader at Deloitte South Asia, told ET Online.

He pointed to three gaps.

The first is lithium: India has strong research, but little proven large-scale capacity to make battery-grade lithium carbonate and hydroxide.

The second is rare-earth extraction, refining and magnet production: state-run IREL already runs a rare-earth extraction plant in Odisha and a refining unit at Aluva in Kerala, but Tyagi said the missing link is industrial-scale conversion of separated oxides into metals, alloys and finished magnets.

The third is battery-grade graphite, which he said needs far stricter purity and particle control than mining alone provides.

FICCI Director General Jyoti Vij said India has strong science through CSIR laboratories, BARC and other institutions. The gap is in scaling lab and pilot processes into industrial plants.

She recommended technology partnerships rather than stand-alone imports, including licensing, joint ventures, joint research and pilot-to-commercial projects. Licences should also include process know-how, quality-control protocols and workforce training, she said.

Meanwhile, GSI said it is strengthening the scientific foundation for this transition. The organisation analyses approximately six lakh samples annually, around half associated with critical minerals, and has reduced the turnaround time for exploration reports from 18 months to 15 months.

The government's bet

The centrepiece of this effort is the National Critical Mineral Mission. Its targets include 1,200 domestic exploration projects, self-sufficiency in processing at least five critical minerals, 1,000 patents and four regional processing parks by FY31.

Exploration is also gathering pace. According to Singh, GSI’s critical-mineral exploration programme has grown from around 60 projects in 2020-21 to approximately 300 projects in 2026-27.

GSI also handed over 39 geological memoranda and reports on critical minerals for auction during field season 2025-26, with another 50 blocks targeted for submission by the end of that field season. Singh said close to 40 blocks covering critical minerals, including rare earths, graphite, lithium and cobalt, had been auctioned based on GSI’s geological reports or memoranda.

The Ministry of Mines has further reported that the average time to operationalise a block has fallen from 43 months for FY16-FY21 auctions to 25 months for those since FY22.

However, the magnet push is the most direct answer to the China shock.

A ₹7,280 crore scheme approved in November 2025 aims to build 6,000 tonnes a year of integrated magnet capacity, with ₹6,450 crore in sales-linked incentives and a ₹750 crore capital subsidy. In August 2026, the Ministry of Heavy Industries received 20 bids, and up to five winners, each with an annual capacity of up to 1,200 tonnes, will be chosen. Larsen & Toubro, Coal India and ReNew are among the bidders.

The Union Budget 2026-27 also announced dedicated rare-earth corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu.

Recycling offers another route to reducing import dependence. A ₹1,500 crore scheme approved in September 2025 aims to build at least 270 kilotonnes of annual recycling capacity, yielding around 40 kilotonnes of critical minerals, with about ₹8,000 crore of investment.

How big is the job, and who pays?

Tyagi said the requirements vary by mineral.

He cited government expectations of 6,000 tonnes a year of magnet capacity, against domestic demand estimates of about 8,220 tonnes a year to 2030. On batteries, he said NITI Aayog's analysis of a 100 GWh scenario implies roughly 56,000 tonnes of lithium carbonate and hydroxide and 98,000 tonnes of graphite by 2030.

The investment required also varies by mineral and processing route.

Tyagi cited estimates of ₹14,400-15,880 crore for neodymium-praseodymium processing and separation in one study, and ₹75,000 crore for graphite refining in another, and said they should not be added together.

His central point is that India needs "bankable" capacity, meaning proven technology, secure feedstock, competitive costs, qualified products and long-term buyers. India needs a few highly utilised plants, he said, rather than hundreds of pilot projects.

Vij argued for layered, mineral-specific support: viability-gap funding, long-tenor loans and credit guarantees at the start, then time-bound production incentives. She also called for long-term purchase commitments from battery, magnet, auto and defence buyers.

“The true measure of mineral security,” Vij said, “is not ownership of ore deposits, but the ability to convert minerals into high-value products domestically.”

India has the resources. The next few years will show whether its refineries can close the crucial gaps.