In a significant strategic move aimed squarely at dismantling China's formidable hold on the global Rare Earth Minerals (REMs) market, India has initiated a two-pronged, aggressive approach: immediately halting REM exports to Japan and simultaneously accelerating efforts to dramatically increase domestic production and processing capabilities within India.
Halting Rare Earth Exports to Japan
Signaling a clear pivot towards prioritizing national interests in these critical minerals, the Indian government has announced its decision to stop exporting Rare Earths, specifically Neodymium, a key component used in magnets. This move directly impacts a decade-old agreement with Japan, established in 2012. The primary objective is to conserve these vital resources for India's burgeoning domestic industries, particularly the strategically important automotive (especially EVs) and aviation sectors. The directive to cease exports has been issued to the government-owned Public Sector Undertaking, Indian Rare Earths Limited (IREL).
This export halt, particularly affecting a close partner like Japan, underscores India's urgent need to secure its own supply chain. Under the previous agreement, IREL supplied approximately 1000 metric tons of Rare Earth Minerals annually, primarily Neodymium, valued around $7 million, to a Japanese company, Toyots. This volume represented a substantial one-third of India's total Rare Earth mining output in 2024 (around 2900 tons).
Sources indicate that Commerce Minister Shri Piyush Goyal conveyed this strategic decision in a recent high-level meeting. The message is unequivocal: India's Rare Earth resources will now be primarily utilized for its own industrial growth and self-reliance, even if it means discontinuing trade with allies like Japan in this specific, critical domain.
Boosting India's Domestic Rare Earth Production
Parallel to stopping exports, India is aggressively ramping up its efforts to enhance domestic exploration, mining, and refining of Rare Earth Minerals. India boasts the world's third-largest Rare Earth reserves, estimated at a significant 6.9 million metric tons. The focus is now on fully leveraging this geological advantage.
IREL is set to play a pivotal role, with plans to double its processing and mining capacity by March 2026. Furthermore, the government is actively introducing incentives to attract and encourage private sector participation across the entire Rare Earths value chain, from exploration to value addition. India is also strategically exploring international collaborations, including partnerships with Central Asian Republics, to secure alternative supply chains and build critical stockpiles, reducing dependence on any single country.
These critical minerals are indispensable for advanced future technologies, including the production of high-efficiency magnets for electric vehicles (EVs), wind turbines, and solar panels. By significantly boosting domestic capacity and ceasing exports, India not only strengthens its own supply chain for these future-ready industries but also directly challenges China's long-standing dominance in the global Rare Earth market. India's import bill for rare earth magnets was considerable in FY 2024-25 (approx. 53,748 metric tons), highlighting the economic benefit of increasing domestic production.
India's Strategic Autonomy in Critical Minerals
These bold and decisive steps underscore India's determination to achieve strategic autonomy and industrial competitiveness by leveraging its own mineral wealth. By securing the supply of Rare Earths for its own use and investing heavily in domestic processing, India is positioning itself as a significant player in the global critical minerals landscape, aiming to break free from existing monopolies and build a resilient supply chain for the future.