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13 June, 2025
India has directed its state-run miner, Indian Rare Earths Limited (IREL), to suspend a 13-year-old export agreement with Japan, aiming to prioritize domestic supply and reduce dependence on China. This decision follows China's export restrictions on rare earth materials, which have disrupted global industries, particularly in the automotive sector.
Export Suspension: IREL has been instructed to halt exports of rare earth elements like neodymium to Japan, which previously accounted for about a third of IREL’s output. This move is intended to conserve resources for domestic needs and support local industries, including automotive and pharmaceuticals.
Domestic Production Goals: IREL plans to increase its neodymium production to 450 metric tons by the 2026 fiscal year, with a target of 900 metric tons by 2030. This expansion is part of India's broader strategy to enhance its rare earth processing capabilities and reduce reliance on Chinese imports.
Policy Initiatives: The Indian government is considering offering fiscal incentives to encourage domestic production of rare earth magnets. These incentives aim to bridge the cost gap between Indian-made magnets and cheaper Chinese imports, supporting industries such as electric vehicles and renewable energy.
Strategic Investments: India has launched the National Critical Mineral Mission with an outlay of ₹16,300 crore to enhance domestic critical mineral production and reduce dependence on imports. The mission covers the entire value chain, including exploration, mining, processing, and recycling of critical minerals like rare earth elements.
China's export restrictions on rare earth materials have impacted global supply chains, particularly affecting industries in India, Japan, and Europe. Diplomats and automakers from these regions are urging China to expedite export approvals to mitigate production delays.
India's decision to halt rare earth exports to Japan is a strategic move to bolster domestic capabilities and reduce vulnerability to external supply disruptions. While this may strain bilateral relations with Japan, it underscores India's commitment to achieving self-reliance in critical minerals.
