India's Rare Earths Push: A New Ally in Germany's Energy Needs

Critical minerals are elements essential for high-tech industries, defence, renewable energy, and advanced manufacturing, but whose supply is subject to geopolitical risks and concentrated production. Examples include rare earth elements used in permanent magnets, batteries, semiconductors, and electric mobility.

India’s collaboration with Germany is significant because both countries are heavily dependent on China for rare earths, especially permanent magnets used in wind turbines, electric vehicles, and defence applications. China currently dominates over 90% of global production and has historically used this leverage to influence trade, as seen in mid-2025 when India’s automobile industry faced supply restrictions following Sino-US trade tensions.

Through joint initiatives such as the National Critical Mineral Mission (NCMM) and the rare earth corridor announced in the Union Budget 2026-27, India aims to secure its supply chain via exploration, processing, research, and manufacturing. Germany benefits by diversifying its supply chain for renewable energy and strategic industries, thereby reducing dependence on China. This partnership reflects a strategic, long-term approach to industrial and energy security while integrating geopolitical, economic, and technological dimensions.

China’s dominance in rare earth elements presents a geopolitical and economic risk for countries dependent on these materials. Over 90% of permanent rare-earth magnets, critical for sectors like electric mobility, wind energy, aerospace, and defence, are sourced from China. This concentration exposes India and Germany to supply disruptions, price volatility, and political leverage.

For India, reliance on China constrains the growth of strategic sectors like EVs, wind energy, and high-tech manufacturing. Similarly, Germany, with ambitions to expand offshore wind capacity to 30 GW by 2030, faces supply-chain vulnerability. Any Chinese restrictions or export controls can delay projects, increase costs, and undermine energy transition targets.

Hence, both countries are pursuing supply chain diversification, joint R&D, and technology transfer initiatives to mitigate these risks. By collaborating on exploration, processing, and recycling of rare earths, India and Germany aim to build resilience in critical sectors while reducing strategic dependency on a single supplier.

The Indo-German partnership strengthens the rare earth permanent magnet (REPM) supply chain through a multi-pronged approach:

• Collaborative exploration and R&D: Joint research on locating deposits, mapping inferred reserves, and refining extraction technologies to enhance output and reliability.
• Processing and manufacturing: Investment in sintered REPM production facilities under India’s National Critical Mineral Mission, targeting 6,000 metric tonnes per annum by 2031.
• Recycling and alternative technologies: Developing downstream processing, recycling, and exploring substitute materials to reduce dependency on raw imports.
• Integration with strategic sectors: Aligning REPM production with wind energy, EVs, aerospace, and defence sectors to create a vertically integrated ecosystem.

While India has the third-largest rare earth deposits globally, producing only <1% of global capacity, several challenges impede scaling up:

• Inferred reserves: Most deposits are based on inferred data, lacking geological mapping and mining feasibility studies, which deters investment due to high capital risks.
• Complex mining environment: Coastal deposits often contain radioactive elements like thorium, necessitating strict safety and regulatory measures, increasing costs and technical complexity.
• Industrial and technological gaps: India currently lacks large-scale sintered magnet production, downstream processing, and recycling capabilities. Skill development and technology transfer are essential.
• Time and cost: Developing mines, processing units, and infrastructure to commercial viability will take years, while global demand, particularly from Europe’s offshore wind sector, is immediate.

Offshore wind energy requires over 200 kg of permanent rare-earth magnets per MW of generated energy, with India planning ~107 GW and Germany ~145 GW by 2030. Currently, over 90% of magnets are sourced from China, creating supply vulnerabilities.

Through collaboration, Germany can leverage India’s rare earth deposits to diversify its supply chain, while India gains technology transfer for offshore wind turbine manufacturing. For example, the MoU between the German Offshore Wind Energy Foundation and the Indian Wind Turbine Manufacturers Association facilitates cooperation on technology, policy dialogue, and component production. Germany benefits from more secure and diversified inputs for its North Sea projects under the Hamburg Declaration, while India gains industrial capability and workforce training.

This partnership exemplifies how strategic resource management, technology transfer, and industrial collaboration can simultaneously enhance energy security, promote renewable energy adoption, and strengthen bilateral economic ties.

Technology transfer and joint R&D are crucial because India currently lacks advanced capabilities in rare earth processing, sintered magnet production, and offshore wind energy manufacturing. Without technical expertise, the country cannot convert its large inferred deposits into commercially viable output or meet international quality and reliability standards required by European buyers.

Joint R&D initiatives facilitate the development of efficient extraction, processing, recycling, and alternative material technologies, reducing dependency on China and creating a sustainable domestic industry. Additionally, knowledge sharing on environmental safety, handling radioactive elements, and industrial automation can accelerate the commercialisation of rare earth projects.

For Germany, collaborating with India ensures secure and diversified supply chains for permanent magnets, essential for renewable energy and defence sectors. Thus, technology transfer and R&D create mutual benefits: India develops industrial capacity, and Germany reduces strategic supply vulnerabilities. In UPSC interviews, this can be linked to themes of global cooperation, strategic autonomy, and sustainable industrial development.

The rare earth corridor initiative spans Odisha, Kerala, Andhra Pradesh, and Tamil Nadu, regions with significant monazite sand and hard rock deposits. Economically, this corridor can stimulate regional industrial development, create employment, and attract domestic and foreign investment in mining, processing, and manufacturing sectors.

Strategically, the corridor reduces India’s dependence on imported rare earths, particularly from China, enhancing supply chain resilience for critical sectors such as defence, aerospace, renewable energy, and electric mobility. By establishing a cluster for mining, research, and magnet production, India positions itself as a reliable supplier to international markets, potentially catering to Germany and the EU’s demand for offshore wind and high-tech applications.

However, challenges remain: regulatory compliance, environmental management, radioactive safety, infrastructure, and skill development are critical to operational success. In UPSC interviews, the rare earth corridor exemplifies how resource endowments, policy planning, and international cooperation converge to advance economic growth, technological capability, and strategic autonomy.