India is embarking on a significant policy shift regarding its rare earth resources, requesting state-run miner IREL to halt exports to Japan. This strategic move aims to safeguard domestic supplies of critical rare earth materials, particularly neodymium, and to mitigate India's longstanding reliance on China for these essential elements. The decision comes amidst escalating global trade tensions, exacerbated by China's recent restrictions on rare earth exports, which have put immense pressure on global industries, including automotive and high-tech manufacturing.

The request from India's Commerce Minister, Piyush Goyal, to IREL, specifically targets a 13-year-old agreement under which IREL supplied rare earths to Toyotsu Rare Earths India, a subsidiary of Japanese trading house Toyota Tsusho. These materials were processed in India for export to Japan, primarily for use in magnet production. In the fiscal year 2024, Toyotsu shipped over 1,000 metric tons of rare earth materials to Japan, which constituted about one-third of the 2,900 tons mined by IREL in that period. Historically, IREL exported rare earths due to a lack of sufficient domestic processing capacity; however, the new policy prioritizes retaining these valuable resources within India.

To support this goal, IREL is planning a substantial expansion of its domestic mining and processing capabilities. The miner is currently awaiting statutory clearances for four new mines and intends to significantly boost its rare earth extraction output. Specifically, IREL aims to produce 450 metric tons of extracted neodymium by March 2026, with plans to double this production by 2030. Beyond raw material extraction, IREL is actively seeking corporate partnerships to establish domestic production facilities for rare earth magnets, targeting applications in the automotive and pharmaceutical industries. Furthermore, the Indian government is developing incentive programs to encourage companies to set up rare earth processing and magnet manufacturing units within the country to meet local demand.

Despite having the world's fifth-largest rare earth reserves, estimated at 6.9 million metric tons, India currently lacks domestic rare earth magnet production and relies heavily on imports, primarily from China. In the fiscal year ending March 2025, India imported 53,748 metric tons of rare earth magnets, crucial components for various manufactured goods including automobiles, wind turbines, and medical devices. The existing rare earth mining operations in India are restricted to IREL, which also supplies materials for the country's nuclear power projects and defense sector.

While the long-term vision is clear, India faces immediate challenges. Halting supplies to Japan under a bilateral government agreement may not be immediate, with IREL expressing a desire for an