New Delhi: India needs to secure supplies of rare earth metals and critical minerals – lithium, cobalt, nickel and copper – in an increasingly hostile global world order. Calling these metals and minerals the new global “strategic chokepoints”, Chief Economic Advisor V Ananth Nageswaran has said in the Economic Survey 2025-26 tabled in Parliament earlier on Thursday that for the structural transformation of India's automotive and electronics industries, securing these minerals is a “non-negotiable strategic core” for long-term resilience.

And while he has eloquently described the evolving situation and China’s hegemony over these rare earths, Nageswaran has also exhorted the government to build domestic capabilities in rare earth metals and minerals.

He has said that India must build these domestic capabilities to avoid being a "client state" in a bifurcated technology landscape. “By controlling critical nodes like rare earths, India aims to move from a position of vulnerability to one of strategic indispensability, gaining leverage in global negotiations,” the Survey said.

Underlining the criticality of rare earths, the Survey said that “Much like oil was to the 20th century, these minerals are now the primary currency of national security, energy transition, and industrial competitiveness.”

It has also warned of a looming global shortage of copper, for example, driven by the dual pressures of the renewable energy transition and the Artificial Intelligence boom. The proliferation of AI data centres is consuming vast amounts of power and hardware, pushing copper demand to a point where global supplies may soon run short. Consequently, copper prices reached historic highs in 2025.

Colonial scramble

In a vivid description of the current global situation on rare earths, Nageswaran has said “nations are currently engaged in a scramble for these resources reminiscent of colonial history. Access to these minerals is being used as a tool of economic statecraft.

For instance, China has tightened export licensing for key rare earth elements and permanent magnet materials essential for defence and electronics to constrain rivals.” The Survey has argued that countries controlling these critical nodes possess "reverse leverage" in global negotiations.

Elsewhere, Nageswaran has also spoken of advanced economies promoting "standards-based" markets for minerals and warned that if these standards are narrowly defined, they could act as trade barriers or trap developing nations in low-value segments—exporting raw ore while advanced economies concentrate on high-value processing.

Also, high sustainability premiums may raise mineral prices, making the energy transition clean but unaffordable for emerging economies like India.

Govt action to secure rare earths

India has launched the National Critical Mineral Mission with ₹16,300 crore outlay. Key pillars of this strategy include domestic exploration, foreign acquisitions, recycling incentives and legal reforms. The Geological Survey of India has taken up 230 exploration projects for strategic minerals in FY26. And through Khanij Bidesh India Ltd (KABIL), India has acquired over 15,000 hectares for lithium mining in Argentina and formed partnerships in Australia and Chile.

Then, a ₹1,500 crore scheme has been approved to promote the recycling of critical minerals from end-of-life products to reduce primary import dependence. Also, the MMDR Act was amended in 2025 to allow the inclusion of new minerals in mining leases and open the sector to more private participation.

Industry innovates to side step shortage

Most OEMs have already either found a way around the shortage or lowered production in the hope of easing supplies in the near future. The shortage has primarily arisen due to China’s restrictions on exports of rare earth magnets – China accounts for more than two-thirds of the global supplies of such metals and magnets - and the restrictions have not been lifted so far.

In a call with analysts after announcing the December quarter results for FY26, Sona BLW Precision MD and Group CEO Vivek Vikram Singh said earlier this week that China's restrictions on the supply of heavy rare earth magnets to India continue. “In response, we have shifted to alternative motor designs that do not use heavy rare earth magnets. We are now manufacturing motors for electric two wheelers and three wheelers using light rare earth magnets and this business has continued to grow very strongly for us.”

Earlier this fiscal, production of several electric two-wheelers (e2w) brands and ICE vehicles was significantly impacted due the shortage of rare earth magnets. To deal with persistent shortages, many pilots are being done for induction motors and ferrite based magnet motors and some OEMs have forged partnerships to make rare-earth free motors. Also, many OEMs have begun managing buffer inventories of such magnets besides looking for alternative global sources.