India Ranks 5th Globally In Rare Earth Reserves But Lags In Processing: Rhodium Group

India is quietly carving out a more significant role in the global electric vehicle (EV) and battery manufacturing ecosystem. While historically dominated by China, the United States, and Europe, the sector is witnessing a shift in capacity expansion toward emerging markets—including India—spurred by rising domestic demand, untapped natural reserves, and supportive policy direction.

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According to the Global Clean Investment Monitor report published by the Rhodium Group, India is among a handful of countries, alongside Turkey, Vietnam, and Mexico, that are witnessing a notable uptick in EV and battery manufacturing activity. This comes at a time when the global market is navigating through overcapacity in battery manufacturing—especially in China—and heightened geopolitical scrutiny over critical mineral supply chains.

The report notes that while China, the U.S., and Europe have long been the epicentres of EV and battery production, new capacity additions in the “Rest of the World” category—including India—are gaining momentum, particularly since 2023. India’s emergence in this space aligns with its ambitions to reduce dependency on imports, both in terms of electric vehicles and their core components such as lithium-ion batteries and rare earth magnets.

Also Read: India Plans ₹5,000 Crore Incentive Scheme to Boost Domestic Rare Earth Magnet Production

Although the report does not quantify investment volumes specifically for India, it highlights the country’s presence in the global expansion map, with projects reportedly under development across both battery and EV production lines. This aligns with domestic announcements from companies like Ola Electric, Tata Group, and Exide Industries, who have committed investments in battery cell manufacturing and gigafactories.

India’s EV market, though currently modest in global terms, is expected to grow rapidly over the next decade. From two-wheelers and compact cars to electric buses and trucks, Indian consumers are showing increasing interest in electric mobility, particularly as state and central governments roll out subsidies, tax incentives, and regulatory nudges such as the FAME II scheme and stricter fuel efficiency norms.

Also Read: Indian Auto, Component Makers Yet To Get Approval For Rare Earth Materials From China

This rising demand is not only pushing global and domestic automakers to localise EV assembly but is also highlighting vulnerabilities in the supply chain—especially for critical materials like lithium, cobalt, and rare earth elements used in motors and battery technologies.

India holds an estimated 6.9 million tonnes of rare earth reserves, placing it among the top five globally. Yet, the country remains heavily reliant on Chinese imports for processing and finished products like neodymium magnets, essential for EV motors. According to the Clean Investment Monitor, India’s move to localise the value chain—through potential production-linked incentive (PLI) schemes and critical mineral exploration programs—could allow it to capture more value domestically and position itself as a key node in the global supply chain.

Also Read: Rare Earths Are the New Oil: Can India Build Its Own Supply Chain?

This policy focus is expected to intensify following China’s decision to curb rare earth exports earlier this year. Indian authorities have already initiated measures to redirect strategic reserves for domestic industries, and multiple domestic firms, including Jindal, Vedanta, and Sona Comstar, have shown interest in rare earth magnet production under the proposed incentive program.

India is at a critical juncture. With the global EV battery market facing potential overcapacity—China alone has battery manufacturing capacity more than double the current global demand—emerging markets like India are presented with a strategic opening. If managed carefully, India could attract significant foreign investment and scale up local production, thereby reducing exposure to international supply shocks.

However, the report underscores a key decision for policymakers: should India continue to allow low-cost Chinese imports that help scale EV adoption in the short term, or should it shield and support domestic manufacturers through incentives and trade policies? Striking the right balance will be crucial to ensuring affordability for consumers while fostering industrial resilience.

Also Read: India Halts Rare Earth Exports To Japan, Amid Severe Crisis Due To China

For Indian consumers, this evolution has direct implications. Increased domestic production could reduce the cost of EVs and batteries over time, making electric mobility more accessible across segments. It could also improve serviceability and reduce wait times for parts and replacements, long-standing pain points in the EV ownership experience.