Critical Minerals: India’s Strategic Opportunity & India-Japan Partnership

In line with our commitment to keeping you informed about key developments, this update covers India’s critical minerals opportunity, the policy framework being deployed to capture it, and the strategic role India-Japan cooperation can play in building resilient supply chains.

Critical Minerals and Economic Security: India's Path to Supply Chain Resilience

Critical minerals and rare earth elements are the foundational inputs for clean energy, advanced electronics, electric vehicles, and defense systems. India faces a structural vulnerability as a fast-growing consumer with its supply chain of critical minerals being heavily concentrated in China. India’s clean energy commitments make this dependence a strategic imperative.

China’s export restrictions on rare earth elements in 2025 intensified global efforts to diversify critical mineral supply chains. In response, India has strengthened international cooperation, including through the Quad Critical Minerals Initiative Framework launched in May 2026, under which India, Japan, Australia, and the United States committed up to USD 20 billion to support resilient supply chains across the Indo-Pacific region. India and Japan have also deepened collaboration under the India-Japan Economic Security Initiative (2024 and 2026), with critical minerals identified as a priority sector for cooperation and enhanced public-private partnerships.

Policy measures:

National Critical Minerals Mission (NCMM): The NCMM was approved in January 2025, with a total outlay of ~USD 3.6 billion, comprising around ~USD 1.7 billion in budgetary support and ~USD 1.9 billion in expected investment through public sector enterprises, spread out over 7 years from FY 2024-25 to FY 2030-31. The NCMM represents India’s strategic pivot from being mineral consumer to developing a full ecosystem across the value chain.

Key quantified targets under the NCMM include:

• Completion of 1,200 domestic critical mineral exploration projects by FY 2030-31;
• Establishment of 4 regional mineral processing parks and Centers of Excellence for driving cutting edge research and innovation in the critical minerals sector; and
• Creation of a National Critical Minerals Stockpile covering at least 5 critical minerals.

The NCMM further promotes critical and deep-seated mineral mining through expedited approvals and the Exploration License regime, enabling private sector participation in the exploration of critical and deep-seated minerals.

Rare Earth Permanent Magnets Scheme (REPM): Despite holding the world’s 5^th largest rare earth reserves, India remains heavily reliant on imports, sourcing around 90% of its rare earth magnets from China in FY 2024-25.

To address this imbalance, the Ministry of Heavy Industries (MHI) launched the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPM) manufacturing scheme in November 2025, with the bidding process now extended until June 29, 2026. The pre-bid conference in April 2026 was attended by 25 companies including JSW Group, Vedanta, Hindustan Zinc Limited and NLC India Limited.

The scheme supports end-to-end domestic manufacturing of sintered Neodymium Iron Boron (NdFeB) magnets, the strongest commercially available permanent magnets, critical to, amongst others, EV motors and wind turbine generators. The scheme has a total outlay of ~USD 760 million over 7 years, including sales-linked incentives and capital subsidies, with the objective of establishing 5 greenfield facilities having a manufacturing capacity of 6,000 metric tonnes per annum sintered NdFeB magnets. The government is also pursuing the development of dedicated rare earth corridors across Odisha, Kerala, Andhra Pradesh, and Tamil Nadu.

Taken together, the NCMM, REPM scheme, and upcoming dedicated rare earth corridors constitute an integrated policy architecture addressing every stage of the critical minerals value chain.

India-Japan Partnership: Bridging the Gap

India and Japan occupy deeply complementary positions in the critical minerals value chain. India offers substantial resource endowment, a growing manufacturing base supported by incentives across EVs, batteries, semiconductors, electronics, and clean energy, and strong policy support through initiatives such as the NCMM and REPM scheme. Japan contributes advanced processing technologies, capital, and a strategic imperative to diversify supply chains given its near-total dependence on imported rare earths.

The Memorandum of Cooperation in Mineral Resources and the Joint Working Group on Critical Minerals provide the foundation for joint investment and technology development. For Japanese companies, India’s minerals manufacturing and recycling ecosystem is reinforced by allowing 100% foreign investment under the automatic route for mining and mineral exploration (except titanium). Together, India’s domestic policy push, the Quad framework, and the dedicated India–Japan partnership create a unique convergence of political commitment and commercial opportunity in the critical minerals sector.