India’s EV sector faces challenges after China tightened export controls on critical rare earth minerals in April 2025.

The restrictions target seven rare earth elements crucial for EV motors and renewable energy systems.

With China controlling 63% of global rare earth mining and 90% of processing, this move could disrupt India’s EV supply chains, leading to production delays and higher raw material costs.

Although India has 6.9 million tonnes of rare earth reserves, it relies heavily on Chinese imports due to limited domestic refining capabilities. In 2024, India imported US$7 billion worth of EV batteries and magnets from China.

Experts suggest alternatives like e-waste recycling and extracting rare earths from abandoned oil wells, but India currently recycles only 22% of its e-waste.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ India’s massive rare earth potential remains largely untapped despite growing crisis

India possesses the world’s fifth-largest rare earth reserves, yet contributes less than 1% to global production despite the strategic importance of these materials 1.

The striking disparity between potential and production is evident in processing capacity: IREL can process only about 10,000 tonnes annually compared to China’s 200,000+ tonnes, creating an enormous capability gap 2.

This production bottleneck forces India to rely on imports despite having an estimated 6.9 million tonnes of its own reserves, highlighting a critical vulnerability in its industrial strategy.

The gap between potential and utilization stems from decades of underinvestment in extraction and processing infrastructure, perpetuating dependency despite having domestic resources.

Recent initiatives like the Rare Earth Permanent Magnet Plant in Visakhapatnam, with a modest capacity of 3,000 kg annually, represent early steps toward self-sufficiency but remain insufficient to meet growing demand 2.

2️⃣ Regulatory and technological barriers hamper India’s rare earth development

India’s rare earth sector faces significant structural challenges beyond simple resource availability, with IREL’s monopolistic control limiting innovation and private sector participation 1.

Stringent regulations on monazite extraction, which contains both valuable rare earths and radioactive thorium, have created regulatory bottlenecks, as these materials fall under atomic mineral classifications controlled by the Department of Atomic Energy 1.