India Eyes Rare Earth Dominance: The ‘New Oil’ Powering Global Clean Energy Ambitions

As the world races toward cleaner and more sustainable energy, rare earth elements (REEs) have become the new strategic assets — often called the “new oil” of the 21st century. Essential to electric vehicles, wind turbines, smartphones, and defense systems, these 17 critical metals are now central to global energy and technology supply chains.

According to a new Kotak Mutual Fund report, rare earths are “invisible to most but quietly powering the shift toward cleaner energy, stronger economies, and a smarter, more sustainable world.”

India’s ‘New Oil’ Opportunity

India, which holds around 6% of global rare earth reserves, is positioning itself as a credible alternative to China, the current dominant supplier. Although India’s current production contributes less than 1% globally, large deposits in Kerala, Tamil Nadu, Odisha, Andhra Pradesh, and Gujarat offer substantial potential for future growth.

To accelerate this, the government has launched the National Critical Mineral Mission (2025) — a strategic initiative aimed at enhancing exploration, mining, and processing of rare earths to reduce dependence on imports and strengthen domestic supply chains.

Strategic Milestones and Global Partnerships

A major boost came when IREL (India) Limited was removed from the U.S. export control list, paving the way for deeper international collaboration. IREL is setting up a new facility in Visakhapatnam to produce samarium-cobalt magnets, a vital component for advanced defense and renewable technologies.

Additionally, India’s participation in initiatives like KABIL (Khanij Bidesh India Limited) and the U.S.-led Mineral Security Partnership (MSP) underscores its growing role in securing global critical mineral supply chains.

China’s Dominance and the Global Shift

Currently, China controls about 70% of rare earth mining and 90% of refining, giving it unparalleled leverage in the green-tech economy. However, the International Energy Agency (IEA) predicts that by 2030, China’s dominance could fall to 51% in mining and 76% in refining, as countries like India, the U.S., and Australia push to diversify sources.

This reflects a larger global trend toward balanced, resilient supply chains, reducing the world’s overreliance on Beijing.

Policy Reforms and Private Sector Push

India’s Mines and Minerals (Development and Regulation) Act reforms, along with Production Linked Incentive (PLI) schemes, are opening the sector to private investment, technology partnerships, and sustainable processing.

The government aims to build self-reliant processing infrastructure, long considered a bottleneck due to high costs and environmental hurdles.

Future Outlook: The ‘Make in India’ Edge

With demand for rare earths expected to surge 300–700% by 2040, India’s strategic approach could make it a global leader in clean-energy materials under the ‘Make in India’ framework.

The Kotak report emphasizes that India’s rise in the rare earth market represents more than a mineral opportunity — it’s a path toward industrial resilience, technological advancement, and strategic autonomy.

“This isn’t just about mining minerals,” the report said. “It’s about building the foundation for energy independence, innovation, and long-term economic security.”