How India is losing the rare earth race to China

The discovery of lithium reserves in Jammu & Kashmir was supposed to be a turning point. But, more than a year later, the lithium story has gone nowhere

MUMBAI: Every once in a while, headlines strike of India striking gold. Just that it’s not gold—but lithium, or some other rare earth element that holds the potential to change the country’s future. The script is now predictable. A government agency makes an announcement. Experts rush in to explain how this could be a game-changer. Stocks of battery companies rise. Politicians talk about self-reliance and reducing dependence on China. And then, the story fades, people forget, and India continues importing the very same materials, mostly from China, because the reality is far more complicated than the headline.

In this game, the winner isn’t the country that has lithium—it’s the country that knows what to do with it. (PTI)

The discovery of lithium reserves in Jammu & Kashmir was supposed to be a turning point. The initial announcement—5.9 million tonnes of lithium—made it seem like India had hit the jackpot. No more dependence on China. No more importing battery materials. It meant a new era for India’s electric vehicle (EV) and battery industry.

But here we are, more than a year later, and the lithium story has gone nowhere.

Turns out, the 5.9 million tonnes was an “inferred resource”. This is a fancy way of saying “we think the lithium is there, but we don’t know if we can actually extract it profitably”. Turns out, the assessments suggested only a fraction of that might be usable. And even if mining were feasible, the region is ecologically fragile and politically sensitive. It’s one thing to discover deposits. Extracting and refining it at scale is another.

Meanwhile, the China, India wants to stop depending on, keeps producing, refining, and selling to the world, India included. The problem isn’t that India doesn’t have lithium or rare earths. The problem is that China has too much of it, and has built an industrial machine around it. It has spent decades mastering the game—from mining to refining to battery production. Today, it controls 90% of the world’s rare earth refining capacity. It doesn’t just dig metals out of the ground; it turns them into finished products at a scale no one else can match. The other factor at play is that China has overcapacity.

For years, China expanded its battery and rare earth production to dominate the global market. But with EV demand fluctuating and supply chains shifting, China now has more production capacity than it needs. Which means, it has to sell the excess somewhere.

That somewhere includes India.

While the government announces “India will become self-sufficient in lithium”, India’s largest traditional battery companies are quietly making deals for lithium supply. The head of research at a private equity firm points out companies such as Amara Raja, Exide and others have already entered partnerships to secure lithium from global sources. They’re not waiting for Indian lithium to come online, because they know it may never happen at scale.

So they’re locking in lithium supply now, ensuring they can continue producing batteries—whether or not India ever extracts a gram of its own lithium.

“Even if India somehow solved the lithium problem overnight, there’s no charging infrastructure,” he points out.

Because lithium isn’t just about making EV batteries. It’s about what those batteries plug into. And that’s where India is struggling. While this is inadequate, what exists is unreliable as well. This is where China is ahead again. It didn’t just build batteries—it built the entire EV ecosystem.

India is still debating policy frameworks. And yet, investors keep hearing pitches from startups claiming they’ve cracked the game.

The analyst described a company with a company with ₹2.5 crore in revenue that had valued itself at ₹300 crore. The company’s pitch was that it had figured out the future of battery technology. But when asked where they would source materials from, the answers were vague.

This is why most investors are sceptical. But there are those buying the story, hoping that India’s battery moment will eventually arrive. Money is still pouring in, fuelling the ‘Indian battery revolution is just around the corner’ narrative.

So, where does this actually leave India? We have lithium, but we aren’t mining it. We have rare earths, but we aren’t refining them. We want to reduce dependence on China, but we still import from them. We are expanding EVs, but we don’t have the charging infrastructure to support them. Meanwhile, startups claim they’ve mastered battery technology, but they can’t explain where their raw materials will come from. But fact is, without actual production and refining capacity, all these are stories that fade into the background.

And China? It keeps producing. Keeps refining. Keeps selling. Because in this game, the winner isn’t the country that has lithium—it’s the country that knows what to do with it.