Critical minerals, strategic stakes: Inside India's bid to break China's supply chain stranglehold

On May 26, on the sidelines of the Quad foreign ministers' meeting in New Delhi, India and the United States signed a bilateral framework to secure the supply of critical minerals and rare earths.

The same day, the four Quad nations; India, the US, Australia, and Japan, unveiled the Quad Critical Minerals Initiative Framework, pledging to mobilise up to $20 billion in public and private investment for mining, processing, and recycling.

Also read: India, US seal critical minerals and rare earths pact amid global supply chain race


"This framework aims to deepen our cooperation across the entire critical minerals and rare earth supply chain, including mining, processing, recycling and related investment," External Affairs Minister S Jaishankar said at the May 26 signing.

US Secretary of State Marco Rubio framed the stakes plainly. "We cannot afford to leave the foundational materials of these industries vulnerable to a single-source monopoly that could deny us these things, not just in a time of conflict, but as a leverage point contrary to our sovereign national interests," he said.

The remarks appeared to refer to China.

"The concentration of critical mineral and rare earth processing capacities in a few geographies has transformed these commodities from industrial raw materials into strategic assets," said Asit Saha, Director General of the Geological Survey of India (GSI). "As the world accelerates towards clean energy, electric mobility, advanced electronics and defence technologies, mineral security is increasingly becoming synonymous with economic and strategic security."

The signing was the latest in a series of moves by New Delhi to secure mineral supply chains outside China's dominance. In January 2024, state-owned KABIL (Khanij Bidesh India Limited) signed an exploration and development agreement with Argentina's CAMYEN SE for five lithium brine blocks in Catamarca Province, India's first overseas lithium mining project, according to the Press Information Bureau (PIB).

India has also signed a Memorandum of Cooperation with Japan on critical minerals during Prime Minister Narendra Modi's visit in August 2025, and an MoU with Australia's Critical Minerals Office for lithium and cobalt projects.

Most recently, on June 1, India and Myanmar agreed to maintain close engagement on critical minerals and rare earths, with Foreign Secretary Vikram Misri confirming the subject had been under bilateral discussion for some time, following talks between Modi and Myanmar President U Min Aung Hlaing, according to the Ministry of External Affairs (MEA).

The Chinese dominance

Critical minerals like lithium, cobalt and rare earth elements power electric vehicles, wind turbines, semiconductor chips, missile guidance systems, and radar among others. China controls approximately 80% of global rare earth refining capacity and roughly 91% of refined rare earth output, according to the Institute for Energy Economics and Financial Analysis (IEEFA). Its share of permanent magnet production, which makes rare earths matter for EVs and defence, stands at approximately 94% globally.

"China's dominance is much greater in processing, separation, refining and magnetic manufacturing than in raw ore production," said Harsh Pant, Vice President at ORF. "That is where the strategic choke point lies."

Beginning in 2023, China converted that position into formal export controls. It imposed a series of export restrictions on critical minerals, rare earths, and related processing technologies.

The move gave the world a glimpse of the supply disruptions and shortages that can arise from heavy dependence on a single source, although the country later suspended some measures following the Trump-Xi meeting in November 2025.

"China has expanded restrictions beyond materials to include certain processing equipment and technologies, making it harder for other countries to quickly replicate the entire supply chain," said a senior fellow at ORF, speaking on condition of anonymity.

For India, the exposure is direct. Rare earth imports from China accounted for more than 45% of India's total rare earth imports between 2014 and 2024, according to IEEFA. Between 2022-23 and 2024-25, China supplied between 59.6% and 81.3% of India's permanent magnet imports by value and between 84.8% and 90.4% by quantity, covering sectors from EVs and wind energy to defence.

"A disruption lasting months can be managed with inventories. A disruption lasting years would constrain industrial policy and manufacturing growth," the ORF fellow said.

The Quad's answer and its gaps

"The geopolitical opportunity is there. Many countries are now willing to provide financing, technology partnerships, long-term purchase agreements, and diplomatic support because they need alternatives to China," said Pant. "Today, there is a premium on supply chain resilience, and that dramatically improves the economics of building processing capacity in India."

But experts say India's processing infrastructure is the weakest link in that chain. According to official trade data cited by the Ministry of Mines, India sourced a major share of its permanent magnet imports from China between 2022-23 and 2024-25, with import dependence ranging between 59.6% and 81.3% by value and 84.8% and 90.4% by quantity.

Also read: Critical Minerals, Cycles and Strategy: Why India should bet on Argentina

India has rare earth refining capacity estimated at 400-500 tonnes per annum of neodymium-praseodymium oxide, or less than 25% of domestic demand, according to the ORF fellow's assessment.

While the Union Cabinet approved a Rs 7,280 crore scheme in November 2025 to establish 6,000 metric tonnes per annum of integrated NdFeB magnet manufacturing capacity, commercial-scale production has not yet begun, and downstream industrial capacity for converting oxide to metal, metal to alloy, and alloy to finished magnets remains underdeveloped.

"Rare earth processing is the hardest capability to build and it takes much longer than opening a mine. If Australia mines more ore but India lacks enough separation capacity, the danger is that the model may not work," said Pant.

Kaira Rakheja, Energy Analyst at IEEFA, said building processing capacity requires more than capital. "The challenge is not simply access to minerals, but building the broader ecosystem, including technology, environmental management capabilities, and downstream industries that can absorb processed materials. If Quad cooperation extends to technology transfer and skills development, it could help India establish the foundations needed to play a larger processing role over time."

India's primary rare earth resource compounds the challenge. Monazite sands, found along its coastlines in Kerala, Odisha, Andhra Pradesh, and Tamil Nadu, contains thorium and uranium, classifying it as a "prescribed substance" under the Atomic Energy Act, 1962, as amended in 2006, according to the Department of Atomic Energy.

Under the Atomic Energy (Working of the Mines, Minerals and Handling of Prescribed Substances) Rules 1984, mining and processing requires a licence from the Department of Atomic Energy, constraining commercial scale-up largely to state-owned entities such as IREL (Indian Rare Earths Limited). Private companies are not permitted to process or export monazite, according to DAE press releases and the Atomic Energy Act.

"India has metal extraction but no industrial-scale metal-to-alloy or alloy-to-magnet conversion lines. This is a decades-long capability build. Without magnet manufacturing, the 'processing hub' label is aspirational," the ORF fellow said.

What is India doing?

The Union Cabinet approved the National Critical Mineral Mission (NCMM) in January 2025, with a total outlay of Rs 34,300 crore over seven years, Rs 16,300 crore in direct government expenditure and Rs 18,000 crore expected from public sector undertakings, according to the PIB. The mission covers the full value chain: exploration, mining, beneficiation, processing, recycling, and strategic stockpiling of at least five critical minerals.

India's FY27 Budget introduced rare earth corridors in four states: Kerala, Tamil Nadu, Andhra Pradesh, and Odisha. GSI is simultaneously intensifying exploration in inland rare earth provinces: the Siwana Ring Complex in Rajasthan, Ambadungar in Gujarat, and Karbi Anglong in Assam.

Also read: Quad vows to invest $20 billion towards critical minerals supply chains

"Within this national effort, GSI's responsibility is to strengthen the first and most fundamental link of the supply chain: resource discovery," said Saha.

"We have moved beyond traditionally known mineral belts and expanded into concealed and underexplored terrains using advanced geophysical, geochemical and geological techniques." He added that GSI is integrating beneficiation and metallurgical characterisation studies into exploration programmes through collaborations with IBM and CSIR-IMMT, Bhubaneswar, "so that mineral blocks are not merely identified, but are better understood from a processing and value-addition perspective."

Can India do it alone?

Beyond the Quad, India holds an estimated 7 million tonnes of rare earth oxides, the fifth largest globally, predominantly in monazite sands, with additional potential in Jammu & Kashmir and inland carbonatite and alkaline complexes, according to the United States Geological Survey (USGS)

"The short answer is no — India cannot achieve complete self-sufficiency," said Pant. "But India can achieve substantial strategic self-reliance in several critical minerals. No major industrial economy is fully self-sufficient. Even China is not."

"Critical mineral deposits differ fundamentally from conventional bulk mineral deposits such as coal or iron ore," said Saha. "Several occurrences are characterised by high grades but relatively small tonnages and limited spatial footprints. Development may require mining models based on modular, mobile and integrated mining-processing units."

IEEFA’s Rakheja said timeline expectations need to be calibrated. "Even where economically viable deposits are identified, it can take a decade or more for mineral discoveries to translate into commercial production. Domestic resources should be viewed as one component of a broader strategy that combines domestic capacity building with trusted international partnerships."

The $20-billion test

"The success of the Quad initiative should be judged by whether it translates into long-term industrial capabilities and operational projects," said Rakheja. "It would require implementation mechanisms that move beyond government-to-government agreements and support industry-led partnerships."

Pant said the most realistic outcome is not replacing China but building alongside it. "The most plausible scenario is not one where India replaces China as the world's processor, but where India becomes a major processing hub in its own right. It requires sustained investment over the next decade. But it is doable."