India Halts Rare Earth Exports to Japan to Boost Domestic Supply

India puts domestic needs first

India Halts Rare Earth Exports to Japan to Boost Domestic Supply: In a bold move, India has paused its rare earth exports to Japan, ending a 13-year-old supply arrangement. This decision marks a turning point in India’s resource management strategy. With global demand for rare earths increasing and China imposing new export restrictions, India has chosen to secure its own supply chain first. The state-owned IREL (India Rare Earths Limited) has been directed to suspend shipments to Japan, especially of Neodymium, a critical element used in electric vehicle motors and wind turbines.

Why the agreement was important?

Back in 2012, India signed an agreement with Toyotsu Rare Earths India, a subsidiary of Toyota Tsusho. Under this deal, IREL mined the rare earths, and Toyotsu refined and exported them to Japan. This partnership helped meet Japan’s high-tech manufacturing needs, particularly after China’s 2010 rare earth embargo against Japan. Since then, India became a trusted backup supplier.

China’s restrictions bring new urgency

But now, history is repeating itself. In April 2025, China restricted rare earth exports, affecting the global market once again. China is still the world’s dominant player, handling over 80% of global rare earth processing. This triggered India to rethink its role. With domestic demand growing, especially for clean energy technologies, India decided it was time to invest more in its own processing and production capabilities.

India’s current position and plans

India currently holds the fifth-largest rare earth reserves, about 6.9 million metric tons. Despite this, the country lacks magnet-making facilities and imports a significant amount—over 53,000 metric tons of rare earth magnets in 2024–25. To fix this gap, India plans to:

• Extract 450 metric tons of Neodymium by 2026
• Double production by 2030
• Boost operations at sites in Odisha and Kerala
• Form new corporate partnerships to set up magnet production
• Roll out government incentives for local rare earth processing

These changes aim to reduce import dependence, especially on China, and make India a strong player in the global green technology race.

Balancing diplomacy and strategy

Although the move may strain ties with Japan temporarily, India is handling it diplomatically. Commerce Minister Piyush Goyal emphasized that the government is looking for a “mutually agreeable solution.” India wants to strengthen its own manufacturing while keeping strategic partnerships intact.

Rare earths are everywhere

Rare earth elements are found in electric vehicles, wind turbines, smartphones, defence equipment, and even medical imaging devices. As the world shifts toward greener technologies, these resources are becoming more valuable than ever. India’s decision to prioritise its internal needs is part of a broader global trend of countries seeking resource security.

Static Usthadian Current Affairs Table