Just a day later, U.S. President Donald Trump responded to China’s actions by announcing 100 per cent tariffs on Chinese goods, effective November 1. He also unveiled new export restrictions on ‘critical software.’ China’s Rare-earth restrictions, imposed on materials, Know-how, products, and services, crippled the defence, aerospace, nuclear, EV, and semiconductor industries across the US and Europe. According to official estimates, the impact in Germany alone will be around €400. The effect in the US will be much more profound.
The Minerals That Power the Modern World
Rare Earths, often overlooked, are the unsung heroes of the digital age. They are the invisible backbone of modern industry, from smartphones and semiconductors to electric vehicles, satellites, solar panels, wind turbines, fibre optic networks, communication systems, drones, medical equipment, and defence systems. Their unique magnetic, catalytic, and luminescent properties make them indispensable for modern high-tech enterprises in energy, economy, defence, and space.China dominates this domain like no other. It controls 70 per cent of global raw materials, 83 per cent of processing technology, and 92 per cent of finished products. This supremacy stems from the 1980s, when the U.S. abandoned rare-earth mining and processing due to environmental concerns, mistakenly classifying them as thorium. China embraced it, endured the environmental hazards and the human costs, and built a monopoly, positioning itself to preside over this new Great Game. The dominance that now haunts the very nation that once nurtured them is evident.
Rare Earths and National Security
These 17 elements of the rare Earth components are, by and large, converted into a single dominant finished product called Permanent Magnets or simply Magnets. For simplification, Rare Earth Elements can be considered as synonymous with Magnets. The scale of the consumption of magnets in defence is staggering; while an electric car needs 3 to 5 kilograms of magnets, an F-35 fighter jet requires nearly 400 kilograms, and a submarine needs about 4 tonnes of magnets. These aren’t mere components—they are the hidden force behind electric systems, thermal stability, laser precision, optical systems, heat resistance, agility, and survivability in modern warfare. Without Magnets, the hardware of contemporary warfare would quite literally fall apart. They are equally crucial for space technologies to withstand harsh, unpredictable environments.
Following initial tariff threats and political turmoil, Presidents Trump and Xi Jinping struck a one-year truce on October 30, 2025, at the APEC summit in Busan, suspending export controls and punitive tariffs. This de-escalatory pause grants the US and its allies breathing room to hasten supply-chain diversification. However, China’s dominance will remain unchallenged for a long time to come, as countering its monopoly will not be easy. Beijing could undercut global efforts by dumping processed minerals at artificially low prices, discouraging foreign investment in mining and research.
The Road Ahead for India
For India too, this development carries significant economic and strategic implications, underscoring the need for a swift and well-coordinated policy response. India relies entirely on imports to meet its magnet demand, with official data showing 26,000 metric tonnes imported in 2023. This figure is projected to double by 2030 due to rising industrial needs. Currently, Midwest Advanced Materials, based in Hyderabad, is the sole domestic producer and is set to supply 500 metric tonnes of Rare Earth magnets annually starting January 2026. The remaining demand continues to be fulfilled through imports, underscoring the urgent need for enhanced domestic production.India’s rare earth elements are primarily found in monazite, bastnaesite, and allanite deposits. Monazite, for instance, is abundantly available in coastal beach sands, with Andhra Pradesh holding around 3.69 million tonnes, Odisha 3.06 million tonnes, Tamil Nadu 2.46 million tonnes, and Kerala 1.84 million tonnes — for a total of roughly 11 million tonnes nationwide. Bastnaesite and allanite, on the other hand, are concentrated in the mountain rocks of Andhra Pradesh, Jharkhand, West Bengal, Karnataka, and Gujarat.
Among these, monazite represents the predominant and most accessible source of Rare Earths. Yet, the full chemical characteristics of India’s monazite deposits remain insufficiently studied. This lack of detailed information has been a significant barrier to the development of domestic processing technologies. Kerala is the first state to take the lead in commissioning a pilot project to study the chemical characteristics of Monazite available to them. The Government of India should lead from the front by persuading other states to initiate pilot projects in line with Kerala, and simultaneously commence commercial production.
In a swift strategic move, the government of India has launched the PLI scheme to address the economic viability gap and spur magnet production —an essential but insufficient step. The production target of 6000 tonnes under the PLI scheme will be unrealistic unless the supply chain is strengthened by involving state government agencies where monazite deposits are available. India urgently needs a high-powered Rare Earth Commission, modelled on the Atomic Energy Commission, by reorganising the decades-old Indian Rare Earths Limited (IREL) set up to focus on nuclear fuel extraction with Rare Earths as byproducts. This initiative will prioritise Rare Earths development and exploration, spearhead R&D, advance process technology, forge international partnerships to secure critical supply chains, develop alternative technologies, and build a strategic ecosystem in the backdrop of shifting geopolitical dynamics. Research is already underway in the US and elsewhere to develop technologies as alternatives to Rare-earth components.
Nevertheless, we must develop robust strategies to counter such tactics. Having missed the Industrial Revolution and endured decades of energy scarcity, India cannot afford to lag behind in the ongoing high-tech revolution. As China wields rare earths as both an economic and geopolitical weapon, India faces a critical choice: act decisively now or risk strategic dependence that could severely undermine its economy, energy security, and national security.
Dr. Bhaskar is a former Diplomat, economist, and Author of the book ‘Energy Security and Economic Development in India: A Holistic Approach’, published by TERI. He served both in the US and China.
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