On 4 April 2025, China announced export restrictions on several rare-earth elements such as samarium, terbium, and dysprosium, materials that underpin electric vehicles, electronics, defence systems, and renewable-energy technologies. With roughly 60% of global mine output and a dominant share of refining, China’s licensing decisions reverberate through supply chains. As approvals slow, global automakers have signalled potential production delays, and European manufacturers report tighter inventories. India, now the world’s third-largest car market, is particularly exposed, and many domestic manufacturers import high-performance magnets and, in some cases, complete motor assemblies to navigate bottlenecks, thereby raising costs and heightening schedule risk.
Recent exchanges between the United States and China have placed critical minerals at the centre of trade discussions, underscoring a broader reality: import dependence on strategic materials is a vulnerability, not merely an accounting inconvenience. India cannot achieve durable self-reliance in clean energy, advanced electronics, or electric mobility while relying overwhelmingly on imported lithium, cobalt, nickel, and rare earths. The question is not whether to reduce dependence, but how to do so quickly, credibly, and at a greater scale.
Two realities stand out. First, China’s leverage, while substantial, is not absolute. Rare-earth extraction and separation rely on mature chemistries that can be replicated when capital and policy support align, and restrictive measures often accelerate investment in rival supply chains. Second, the fastest domestic lever India can pull is not mining alone but urban mining, the high-purity recovery of critical minerals from used batteries, end-of-life electronics, and retired EVs. Done well, urban mining reduces import risk, shortens lead times, and lowers environmental footprints per unit of material.
The scale of recoverable material is significant. India’s e-waste generation rose from about708,000 tonnes in FY2017-18 to 1.6 million tonnes in FY2021-22, yet the share treated in the formal sector increased only from 9.8% to 32.9%. This widening gap reflects weak collection, sorting, and traceability; valuable materials are often degraded or lost in informal processing. Even advanced hydrometallurgical or pyrometallurgical plants cannot meet battery or magnet-grade purity specifications without a steady stream of clean feedstock.
Policy momentum has begun to address this. The National Critical Mineral Mission (NCMM), launched in January 2025 with an outlay of Rs. 1,500 crore, prioritises recycling of lithium-ion batteries, catalytic converters, and e-waste. Its Recycling Linked Incentive (RLI) ties benefits to recovery volume, process efficiency, and output purity, aligning incentives with what Original Equipment Manufacturers (OEMs) actually need in recycled inputs. Yet the incentives alone cannot overcome upstream frictions, the system must deliver predictable, high-quality input flows.
Three reforms can unlock this potential.
- Expand Extended Producer Responsibility (EPR) to strategic minerals. Require producers/importers to retrieve lithium, cobalt, nickel, and rare earths at end-of-life; measure compliance by mineral recovery and purity, not collection tonnage alone.
- Regulate black-mass exports. Tie export permissions to domestic refining utilisation and output-quality standards to retain value onshore, build local know-how, and stabilise supply for Indian manufacturers.
- Permit safeguarded e-waste imports. Allow selected streams under Basel-compliant, traceable, and environmentally sound rules so plants can run at scale, compress learning curves, and lower unit costs without compromising safeguards.
Urban mining should be complemented by two additional levers that reduce exposure over the medium term. Substitution, for instance, wider use of chemistries that rely less on cobalt or nickel, or motor designs that cut heavy-rare-earth intensity would diversify technical pathways. Efficiency, using fewer grams of critical minerals per device or motor through design improvements will deliver compounding security gains. Together, substitution and efficiency reduce pressure on supply even as demand for clean technologies grows.
If pursued with urgency, domestic recyclers can consistently achieve battery and magnet grade outputs that meet OEM specifications. Producers take back networks and formal recyclers can ensure stable, clean feedstock for plants. As scale and process optimisation improve yields, input costs for Indian EVs and electronics become less volatile, while a credible recycling and refining base positions India as a regional hub capable of supplying both domestic and global value chains.
China’s export controls aren’t just trade policy, they’re a wake-up call about the geopolitics of critical raw materials. In the race for clean energy dominance, the countries that control mineral supply chains will shape the future. India should seize this moment to convert policy intent into system reliability, through EPR that targets minerals, regulated rules for black mass exports, safeguarded e-waste inflows and coordinated pilots with industry to validate purity, logistics and offtake. Urban mining is not merely a sustainability measure; it is a strategic imperative that can lower costs, reduce shock exposure and accelerate India’s clean-technology ambitions.
(Views expressed are the author’s own and don’t necessarily reflect those of ICRIER.)
