India has instructed state-run miner IREL to halt rare earth exports to Japan, reversing a 2012 agreement with Toyota Tsusho’s Toyotsu Rare Earths India. The move, reported on June 13, aims to prioritize domestic needs and reduce dependency on China’s dominant rare-earth export regime
🔍 Why the Sudden Change?
Several factors fuel this decision:
- China suspended rare-earth exports in April, disrupting global EV and tech supply chains—prompting urgent strategic recalibration
- Japan imported over 1,000 MT of neodymium from IREL in 2024—about one-third of IREL’s total output
- India plans to scale up rare earth processing domestically, targeting 450 MT of neodymium production in FY26 and doubling by 2030
🏭 Domestic Production Ambitions
India is ramping up its rare earth infrastructure:
- IREL operates extraction plants in Odisha and refining in Kerala, with upcoming expansions waiting for statutory clearances
- The government is offering fiscal incentives via the National Critical Mineral Mission to attract investment in magnet processing and manufacturing
- A planned delegation to Beijing seeks to negotiate urgent supply for the auto sector, while long-term reliance on domestic capacity is pursued
🤝 Implications for India–Japan Ties
- The suspension targets a bilateral arrangement, so immediate cessation may require diplomatic negotiations, with officials emphasizing an amicable resolution .
- India and Japan have previously agreed to a framework supplying 4,100 MT of rare earths, representing about 10–15% of Japan’s peak demand
- As part of Quad cooperation and Bhutan plans, Japan is investing in alternative supply chains, including facilities in India and broader Indo-Pacific partnerships
🌍 Why It Matters Globally
- Global supply chain impact: This move adds pressure to global industries already feeling effects from China’s export restrictions
- Strategic autonomy: By reducing reliance on China, India strengthens its position in critical mineral geopolitics .
- EV and defense resilience: Neodymium magnets essential for EVs, wind turbines, and defense systems will now depend more on India’s domestic capacity business-standard
✅ Final Take
With this move, India halts rare earth exports to Japan, signaling a strategic shift. In the short term, diplomatic discussions with Japan will determine the timeline. Longer term, India aims to build self-reliant supply chains and reduce vulnerability to global disruptions—marking a decisive step toward atmanirbhar critical minerals.
