India holds the world’s third largest rare earth resources, yet produces only a fraction of its potential due to radioactivity challenges and missing industrial infrastructure, according to data from the Atomic Minerals Directorate for Exploration and Research (AMD).

The country’s rare earth reserves, essential for manufacturing smartphones, electric vehicles, wind turbines and defence equipment, total approximately 8.52 million tonne of Rare Earth Oxide (REO) equivalent. REO refers to the processed form of rare earth elements, a group of 17 metals critical to modern electronics and clean energy technology. Despite this abundance, India lacks the mid-stream and downstream facilities needed to convert raw materials into finished products like magnets and alloys.

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For Indian consumers, this gap means continued dependence on imports for components found in everyday devices, from mobile phones to laptop batteries to electric scooters.

Where India’s Rare Earth Deposits Are Located

AMD, a constituent unit of the Department of Atomic Energy, has mapped rare earth resources across multiple states. The largest concentration, roughly 7.23 million tonne REO equivalent, exists in coastal beach sands and red sand deposits. These span parts of Kerala, Tamil Nadu, Odisha, Andhra Pradesh, Maharashtra and Gujarat, with additional inland deposits in Jharkhand, West Bengal and Tamil Nadu.

The deposits contain monazite, a mineral that carries rare earth elements alongside thorium, a radioactive material. This radioactivity makes extraction complex, time-consuming and expensive compared to deposits in other countries.

Hard rock deposits in Gujarat’s Ambadungar area and Rajasthan’s Bhatikhera and Dantala regions contain an additional 1.29 million tonne of REO. Smaller riverine deposits in Chhattisgarh and Jharkhand hold roughly 2,000 tonne of heavy mineral concentrates containing xenotime, a phosphate mineral rich in yttrium and heavier rare earth elements used in specialised electronics.

Rare Earth Processing Challenges

India’s rare earth challenge is not merely about quantity. The deposits are lean in grade, meaning the concentration of valuable elements is lower than in competing nations. More critically, Indian monazite contains predominantly light rare earth elements. Heavy rare earth elements, which command higher prices and are essential for permanent magnets in electric motors, are not available in economically extractable quantities.

The country possesses facilities for mining, separation, refining and oxide production. It has also developed metal extraction capabilities. However, industrial-scale facilities for producing alloys and permanent magnets, the intermediate products that manufacturers actually purchase, do not exist domestically.

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This missing middle segment forces Indian manufacturers to import processed rare earth products even as raw materials sit underground.

National Critical Mineral Mission Approved

The Centre approved the National Critical Mineral Mission (NCMM) on 29 January 2025 to address these gaps. The mission aims to secure long-term sustainable supply of critical minerals, including rare earth elements, and strengthen the entire value chain from exploration through to recovery from end-of-life products.

According to written reply in the Rajya Sabha by Union Minister of for Science & Technology and Earth Sciences, Dr. Jitendra Singh, the Ministry of Mines has auctioned 46 critical mineral blocks since the mission’s approval, including seven blocks specifically for rare earth elements. The Centre also auctioned seven exploration licence blocks, two of which cover rare earth deposits.

Under NCMM guidelines issued on 14 November 2025, the government is funding pilot projects for recovering critical minerals from mining waste, including overburden, tailings, fly ash and red mud. The Non-Ferrous Technology Development Centre has received approval for one such project focused on separating rare earth elements from multiple feedstocks.

Rs 1,500 Crore Recycling Incentive Scheme

The Union Cabinet approved a Rs 1,500 crore incentive scheme to promote critical mineral recycling, including rare earth elements. The scheme guidelines were issued and the programme launched on 2 October 2025.

The Ministry of Mines also formulated a policy in December 2025 for exploring critical minerals in new projects and recovering them from existing mine waste. This policy aims to systematically identify, assess and extract critical and strategic minerals from both new exploration areas and operational mines.

Khanij Bidesh India Limited (KABIL), a joint venture under the Ministry of Mines, has been established to acquire overseas mineral assets including lithium, cobalt and rare earth elements. This dual approach, developing domestic resources while securing international supply, reflects the strategic importance of these materials.

Customs Duty Relief for Critical Minerals

The government eliminated customs duties on 25 minerals and reduced basic customs duties on two minerals during Union Budget 2024–25. In Budget 2025–26, the Centre exempted cobalt powder, lithium-ion battery waste and scrap, lead, zinc and 12 other critical minerals from basic customs duty.

Union Budget 2026–27 proposed extending basic customs duty exemption to capital goods required for processing critical minerals, further reducing costs for companies seeking to establish domestic processing facilities.

The USGS Mineral Commodity Summaries published in January 2025 confirmed India’s position as holding the world’s third largest rare earth resources. Whether the country can convert this geological advantage into industrial capacity will depend on private sector investment in the missing mid-stream facilities over the coming years, said an industry leader.