India Rare Earth: Reserves, IREL & Supply Gap

India rare earth reserves rank third globally at approximately 6.9 million metric tons of rare earth oxide, yet the country produces less than 1% of annual global supply—around 2,900 metric tons of mixed rare earth chloride in 2024. That gap between resource base and output is the defining constraint on India’s critical minerals strategy, and the one the government is now spending heavily to close.

India Rare Earth Reserves — Deposits and Geology

India’s rare earth resource is dominated by coastal monazite-bearing beach sand deposits rather than hard rock orebodies. The country holds approximately 35% of the world’s beach and placer mineral deposits, concentrated in six coastal states: Kerala, Tamil Nadu, Odisha, Andhra Pradesh, Maharashtra, and Gujarat.

The USGS Mineral Commodity Summaries 2025 cites India’s reserves at 6.9 million metric tons REO. India’s Atomic Minerals Directorate (AMD) applies a broader methodology including inland hard rock deposits—principally Ambadungar in Gujarat and the Bhatikhera and Dantala deposits in Rajasthan—to arrive at a higher figure of 8.52 million tonnes. The monazite resource alone is estimated at 13.15 million tonnes of ore containing approximately 7.23 million tonnes REO equivalent.

The critical qualifier for investors is grade. India’s beach sand monazite deposits are lean and geologically dispersed compared with China’s Bayan Obo hard rock orebody in Inner Mongolia, which concentrates high-grade mineralisation in a single large deposit amenable to bulk mining. Indian deposits require selective extraction and face additional regulatory constraints because monazite is classified under the Atomic Energy Act due to its thorium content—a classification that has historically limited private sector participation and compressed the exploration pipeline.

For context on what rare earth elements are and why deposit geology matters for processing economics, see our explainer.

IREL — India’s State Rare Earth Producer

Virtually all of India’s rare earth production flows through IREL (India) Limited, a public sector undertaking (PSU) under the Department of Atomic Energy, operating since 1952. IREL runs four units across three states: the Chavara mineral separation plant in Kerala; the OSCOM complex at Chhatrapur, Odisha; the Manavalakurichi (MK) plant in Tamil Nadu; and the Rare Earth Division (RED) at Aluva, Kerala.

The production chain runs from beach sand mining and mineral separation at OSCOM and Chavara, through to rare earth extraction at OSCOM’s dedicated Rare Earth Extraction Plant (REEP)—commissioned in 2015–16 with a capacity of 11,200 tonnes per annum of mixed rare earth chloride—and then to individual oxide refining at the Aluva RED facility. Aluva produces high-purity separated compounds including neodymium-praseodymium oxide, lanthanum, cerium, samarium, gadolinium, and yttrium, all at 99%+ purity. IREL also operates a Rare Earth Permanent Magnet (REPM) plant at Visakhapatnam producing samarium-cobalt magnets for defence and atomic energy applications.

A notable policy signal came in June 2025, when IREL suspended its long-running export agreement with Toyotsu Rare Earths India—a Toyota Tsusho subsidiary—to which it had shipped over 1,000 metric tons of rare earths in 2024. The suspension was framed explicitly as a decision to prioritise domestic supply over export revenue, consistent with the government’s broader push to retain value-added processing onshore. IREL’s exports have historically reached buyers in the USA, UK, France, Germany, Norway, and Japan.

For the broader regional context, see our Asia rare earth hub.

India Rare Earth Policy — The 2025–26 Push

India’s policy response to its midstream deficit accelerated sharply in 2025. The National Critical Mineral Mission (NCMM), approved in January 2025, allocates ₹34,300 crore over seven years—₹16,300 crore in direct government spending and ₹18,000 crore through PSUs. The NCMM targets 1,200 domestic exploration projects by 2031, acquisition of 50 overseas mineral assets via KABIL, and self-sufficiency in processing at least five key rare earth elements. The near-term production target is 2,000–3,000 tonnes of refined REO output in FY2025–26.

The more targeted intervention is the Rare Earth Permanent Magnet (REPM) Manufacturing Scheme, approved by the Cabinet on 26 November 2025 and notified on 15 December 2025. The scheme commits ₹7,280 crore—comprising ₹6,450 crore in sales-linked incentives over five years and ₹730 crore in capital subsidies—to build 6,000 metric tons per annum of integrated sintered REPM manufacturing capacity. Up to five beneficiaries will be selected through global competitive bidding, with a two-year facility setup period before the incentive clock begins.

The Union Budget 2026–27 added a structural geography layer: four dedicated Rare Earth Corridors across Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, designed to integrate mining, processing, research, and manufacturing in geographic clusters aligned with existing IREL infrastructure. Customs duty exemptions on rare earth compounds introduced in Budget 2024–25, extended to capital goods for critical mineral processing in 2026–27, reduce the equipment cost for downstream entrants.

China’s progressive tightening of rare earth export controls since 2023 is the direct geopolitical driver behind the pace of India’s policy acceleration.

India Rare Earth International Partnerships

India joined the Minerals Security Partnership (MSP)—a 15-nation coalition including the USA, EU, Japan, South Korea, Canada, and Australia—and has positioned its domestic policy commitments as complementary to Western supply chain diversification goals. At the US Critical Minerals Ministerial in February 2026, External Affairs Minister Jaishankar highlighted the NCMM and the Rare Earth Corridors programme and conveyed India’s support for the US FORGE initiative.

Overseas asset acquisition is delegated to KABIL (Khanij Bidesh India Limited), a joint venture of NALCO, HCL, and MECL. KABIL is actively building a portfolio of critical mineral assets across Argentina (lithium), Australia, Zambia, Mozambique, Peru, Zimbabwe, Malawi, and Côte d’Ivoire. The strategic logic mirrors China’s overseas resource acquisition model of the 2000s, applied to a democratic market economy context.

Technology access has been unlocked by IREL’s removal from the US export control list, enabling American technology transfer for REE separation and magnet manufacturing—a meaningful change for a PSU that previously faced equipment sourcing constraints. A joint venture between India’s BatX Energies and Germany’s Rocklink GmbH established India’s first integrated rare earth magnet recycling facility in July 2025, adding a circular supply dimension to the upstream and midstream build-out.

The China dynamic remains a live risk factor. Border tensions in 2024 triggered rare earth supply curbs on India; these were partially lifted following Jaishankar–Wang Yi talks in September 2025. For the supply chain geopolitics framing, see our 2026 rare earth geopolitics update.

India Rare Earth Outlook — The Midstream Gap

The structural constraint on India’s rare earth ambitions is blunt: midstream processing—alloys and magnets—is effectively absent at industrial scale. India imported 53,748 metric tons of rare earth magnets in the financial year ending March 2025, the overwhelming majority from China, at an annual cost of approximately $221 million across rare earth elements, magnets, and related materials. Between 80% and 90% of India’s rare earth supply requirements are sourced from China.

IREL’s Director of Marketing, Rajnish Khale, summarised the position clearly in an April 2026 interview: “India has adequate rare-earth resources but absence of mid-stream and downstream industries in the RE value chain limits production capacities.” The reserves are not the problem. The conversion of mined material into alloys and then sintered permanent magnets—the value-added steps that define competitive position in the global rare earth supply chain—remains the gap.

The REPM scheme is the policy answer, but timelines are realistic rather than immediate. A two-year facility setup period means the first commercial magnet output from scheme beneficiaries is a 2027–28 story at the earliest, and only if bidder selection proceeds on schedule in 2026. India’s position in the global rare earth producing country rankings is unlikely to shift materially until that midstream capacity is operational.

For NdPr pricing context—the benchmark relevant to India’s REPM demand—see the neodymium price tracker and praseodymium price tracker. India’s REPM scheme targets sintered NdFeB magnets as the primary output, so NdPr oxide procurement costs will be the key variable determining scheme economics for successful bidders.

India Rare Earth — Country Snapshot

This article is for informational purposes only and does not constitute investment advice. Data is sourced from USGS, PIB India, AMD, and IREL public disclosures. Figures are subject to revision.