India's Emerging Role as the Third Pillar in Global Rare Earth Supply Chain: Strategic Opportunities and Alliances

Indian companies such as Sona Comstar are establishing magnet production facilities. (Representational)

India is positioned to emerge as a crucial contributor to the global rare-earth supply chain as the Trump-Xi summit provides a year-long reprieve from China's export restrictions and longstanding dominance, creating an opportunity for New Delhi to develop its refining capabilities, magnet manufacturing, and downstream operations, according to a recent analysis published in The Diplomat.

The country possesses considerable raw material resources—its coastal sand deposits contain abundant reserves of monazite, bastnaesite, and other rare-earth minerals. However, India's processing capacity and environmental regulations have historically been insufficient. This situation is now evolving, according to Jianli Yang in the Asia-Pacific focused publication.

"With robust political determination and an expanding technological ecosystem, India could soon establish itself as the third pillar—alongside the United States and Japan—in a democratic rare-earth network," The Diplomat analysis observed.

The Trump-Xi meeting in South Korea last month has "provided a breathing period" and "India now presents a path to independence," the publication stated.

According to White House documentation, following discussions between Xi and Trump in Busan, South Korea last month, Beijing has agreed to postpone specific export controls on rare earth materials for one year after reaching a trade agreement with Washington.

In June this year, India announced negotiations with companies and plans for fiscal incentives to support domestic rare-earth magnet manufacturing, aiming to reduce dependency on China. Indian enterprises like Sona Comstar are developing magnet production capabilities. The state-operated Indian Rare Earths Ltd. has been commissioned to enhance refining capacity, and the Indian Space Research Organisation is adapting high-purity separation technology initially created for satellite components, Yang reports.

More importantly, India is connecting these domestic initiatives with strategic international partnerships. Discussions with the United States, Japan, and Australia under the Quad framework have intensified collaborative exploration, co-financing, and technology-transfer initiatives, wrote the research fellow from Harvard University's Kennedy School of Government in The Diplomat.

The world's fifth largest economy, according to the author, "contributes both scale and credibility" to the rare earths competition with a manufacturing foundation substantial enough to incorporate downstream industries—magnets, motors, batteries—that smaller rare earth producers such as Australia or Brazil cannot fully support.

Yang emphasizes that while Australia remains essential for mining and preliminary processing, Brazil provides necessary Western Hemisphere diversification, and the US has advanced in producing NdPr metal in California and magnets in Texas—none can independently counterbalance China's predominance.

"India, however, transforms the equation by connecting supply diversification with market demand," the author notes, adding that the country can utilize its own production, export refined materials, and—if integrated with allied partners—become a center for both production and processing.

India's approach is also less susceptible to short-term political changes as Prime Minister Narendra Modi's "Atmanirbhar Bharat" (self-reliant India) initiative enjoys support across party lines, he states.

Washington should regard India not merely as a partner in defense or semiconductors but as a fundamental element of a new "rare earth alignment," the analysis suggests, outlining several measures including exploring co-financing of magnet facilities in India through US International Development Finance Corporation loans or EXIM guarantees.

India and the US can also establish reciprocal stockpiles, the author proposes, noting that "expediting technology sharing on refining and waste management will enable India to bypass costly experimental phases that delayed progress in the United States and Australia."

Additionally, it suggests that rare earth cooperation should be "incorporated into the central agenda" of the Quadrilateral grouping—comprising India, Japan, Australia, and the United States—making it as vital as joint naval exercises or semiconductor collaboration.

Yang indicates that India's recent achievements in attracting advanced manufacturing, from Apple assembly operations to chip design centers, demonstrate its capability when strategic alignment and financial incentives converge.

The industrial initiative led by PM Narendra Modi's government combined with Quad alignment and global manufacturing influence could benefit India.

If the United States, Japan, Australia, and Brazil "support India's emergence as a reliable supplier and processor," they can establish the groundwork for a truly diverse rare-earth market and consequently, greater geopolitical resilience, according to The Diplomat.