India's Critical-Minerals Processing Gap

J. M. Lindstrom, Aakansha Singh

Chokepoints exist by way of restriction. Think of a neck on a human; it only serves as such a critical stranglehold because it is the bottleneck where all oxygen must come and go. With only one line of support, such a line creates deeply entrenched risk. To resolve such a chokepoint, a nation must diversify. Critical minerals have served as a chokepoint for much of the world for this reason; there is no alternative to rare earths or critical minerals, and sourcing and processing compound the rarity throughout the supply chain. There is only so much gold in the world, and only so many nations with the capability to properly extract, refine, and utilize it. Such gold is used to make components for microchips, which in turn power AI. Working throughout the supply chain requires diversification on all fronts; the US, for example, is able to create microchips domestically as well as source them from Taiwan, but requires diversity not just on the back end but also at the head of the supply chain: the mines and processing.

India is a nation uniquely suited to such a role of diversification, and thereby insulation from leverage. India holds the world's third-largest rare earth repository1 and is geographically rich in critical minerals; however, it is the downstream processing capacity that hinders the strategic value of the nation. One such critical failure in India is due to deposits of monazite, a radioactive mineral. The Geological Survey of India recorded a total of 482.6 million untapped tonnes of rare earth ore in the nation, with 13.15 million tonnes of monazite alone, according to the Atomic Minerals Directorate.2 The Union Cabinet approved government expenditure for a specific National Critical Mineral Mission;3 however, the fact that these minerals are radioactive in turn creates a tension over the ownership, volatility, and inherent risk of processing, mining, and refining.

That tension is the heart of this brief, where India's critical mineral processing gap acts not only as a general capital or investment shortcoming but as a structural problem with international implications. It is a regulatory and jurisdictional split, as the Ministry of Mines-funded initiatives, such as the NCMM, the Dedicated Rare Earth Corridors and the lithium/nickel incentive scheme, sit on one track, while the Department of Atomic Energy rests upon another.4 The DAE therefore sits on India's single largest identified REE resource stream, which is untouched by that very funding.29 Because the two tracks move on different timelines and under different statutory logics, India functions less as a near-term substitute for Chinese processing capacity and more as a longer-term diversification partner, whose different mineral streams, lithium and nickel on one side, monazite-derived rare earths on the other, will come online at very different speeds.

The AMCR regime reserved mining to IREL, while Malaysia's Lynas refinery is a recognized comparator operating under a different, non-monopoly, licensing-based model.5 The designation and corresponding capabilities of each nation reflect the geostrategic importance of each. The divide between the DAE and the Ministry of Mines is, in large part, what keeps these minerals isolated and untapped from the funding. India holds roughly 5.3% of global aluminium output, as well as a strong bauxite base of deposits.6 Despite that, it seems to lack nickel, molybdenum, neodymium, or indium, as well as a supply-short silver and copper base.7 These numbers are important because they don't just reflect what India possesses, but also where India is weak in processing, everywhere. India's other mineral gaps are bottlenecked through technological and capital investment,31 but the monazite displays a case wherein it is the governing system itself, something potentially reflected throughout the nation's governance structures. India additionally holds clay-based lithium deposits, spread throughout Jammu and Kashmir, which also lack the critical infrastructure to process such critical minerals.8 There is no jurisdictional issue therein; however, it is the same story as much of the world: a lack of processing, an abundance of untapped resources.

The resolution under the DAE in March of 2025 was the allowance of private exploration of the monazite deposits to non-government actors, while extraction and processing remained exclusively under IREL, a DAE entity.9 Firms could look, but not touch. Monazite's radioactivity stems from its thorium content, as well as titanite, which is governed under a different regulatory model than the Ministry of Mines' critical mineral initiatives.10 Because there are different qualities and kinds of minerals, the governance complications under the role of the minerals shift with each location, processing, and corresponding risk. The 13.15 million tonnes of monazite rest rather untapped for exactly that reason.

The value of critical minerals is not purely in extraction; like oil, it must be refined to gain value. In fact, 80-90% of the value of a critical mineral supply chain rests solely in the processing stage, which rests largely outside of India, in China.11 Domestic processing capacity is limited to low-value chlorides and oxides produced at long-ago built institutions. There is no cutting edge to speak of. This innately pushes India towards exporting raw minerals rather than retaining value domestically through processing of the minerals. Indian industry lacks the extraction technology needed, which only compounds the capital shortfall with technical know-how, to best refine minerals. Because the REE is bottlenecked by the structure of extraction and not a technological problem, it fluctuates with accessibility of jurisdiction, tightening access through the 2016 AMCR threshold on beach-sand mining,12 a 2019 amendment reducing that threshold to zero, shuttering all mining,13 and 2025's reopening of the exploration.14 Strategic resources dependent upon the whim of domestic politics, despite an intensely competitive international pressure on such resources, inherently lead to disadvantages in a shifting domestic landscape, something absent from nations like China, wherein national goals are held as the standard for all governmental officials. The resolution to solve the monazite bottleneck is not more NCMM funding, as it cannot directly access the sands due to their radioactivity; it instead requires legal permits for extraction and processing. The problem is therefore twofold in India: why certain minerals are stuck in bottlenecks. India's logistics and processing capacity costs roughly 7.97% of GDP per the most recent (2025) government assessment — down from the often-cited but since-superseded 13-14% estimate — comparable to the international standard of roughly 8-9%.15 Such a cost penalty naturally deters involvement in India's near-term processing, and requires assessment of the true value of such plants. Indian port turnaround time and cargo throughput also lag international standards, so transport which connects mining regions to ports serves as a logistical bottleneck, with road and rail expansion subject to repeated delay, historically.16 The mine-to-manufacturing corridors further decrease the viability of processing in India.

Both constraints on India's processing would need to be resolved before any concrete processing plans can become successful. That said, the direct coordination between the AMCR and DAE would fix one half of the problem; the cost and logistics are quite another issue, despite the NCMM's attempts to resolve them. The fragmentation of jurisdiction creates conflict without a clean resolution, the Ministries of Mines, External Affairs, Commerce and Power require some level of authority over mineral extraction and processing, but must work in tandem. There is no single-window clearance system for mining and processing projects, leading to delays in innovation at present. The clearest instance is, of course, that between the DAE and the Ministry of Mines. Conversely, Malaysia utilizes a licensed-private operator model; Lynas's Pahang refinery does not avoid the radiological constraint monazite poses, but it does display how that constraint can be managed under private operation. Its license, renewed for ten years in March 2026, is conditional on ending production of radioactive Water Leach Purification residue by 203117 (Malaysia's Ministry of Science, Technology and Innovation; Associated Press, March 2026). IREL's monopoly model faces the same radiological constraint under different institutional terms, and whether that makes IREL's path faster or slower than Lynas's is exactly the open question this brief turns to next: does the March 2025 AMCR liberalization put India on a faster processing timeline than Malaysia's, or does it risk recreating Malaysia's waste-disposal bottleneck inside a different institutional structure?

The Indian government response to the gap seems substantial, as the NCMM holds a seven-year implementation strategy, a government allocation, as well as additional funds arising from stakeholders and corresponding investment.18 Additionally, the Union Budget for 2026 and 2027 contained a mine-to-manufacturing strategy of cohesion, named The Dedicated Rare Earth Corridors.19 Nickel and lithium processing were given even more specific incentives for funding to promote the development of the higher-value minerals.20 Overall, including a November 2025 agreement which promoted funding to build 6,000 tonnes annual rare earth magnet manufacturing,21 India seems to have attempted a stronger approach to creating domestic cohesion. Specific sites have been established in Odisha, Kerala, Andhra Pradesh and Tamil Nadu, coastal states which correspondingly contain beach sand monazite deposits.22 These all fall under only one jurisdiction though: the Ministry of Mines. What it lacks is institutional cohesion between the DAE minerals and the Ministry of Mines organizations. The question therefore is if the NCMM fund even touches the atomic minerals.

Monazite-derived REE production remains firmly in the hands of IREL, aforementioned under the DAE. The Atomic Minerals Directorate for Exploration and Research carries out the specific funding of mineral processing and extraction projects, as well as holding the restrictions of such extraction tightly. As such, monazite falls under the DAE and DAE alone. So the NCMM flagship funding does not touch any DAE resources; and so despite the innovative funding for processing, the issue remains firmly as it did before, a split between the domestic distribution of rare minerals and their futures. Furthermore, the messy logistics further complicate the funding split, as the Dedicated Rare Earth Corridors are sited around the same coastal states which hold the bulk of India's monazite beach sands. As such, the two organizations are rubbing shoulders in extraction and research, with no jurisdictional agreement or understanding. IREL's existing output of ilmenite, rutile, zircon and other non-atomic minerals has seen extraction in the region,23 it is the specific avoidance of the radioactive minerals which creates the tension in the regions with high monazite content. The corridors and monazite stream are adjacent, as such, the minerals contained within the 13.15 million tonnes of monazite and the other rare earth oxides therein cannot be accessed or extracted. The result is locked-down minerals that are not radioactive, but happen to be surrounded by monazite sands, and as such sit useless while the world fights over rare minerals. Nations which seek to exploit the seafloor to access minerals have an easier path to the resources than the Indian extraction sites mere miles away from the rare earths. The issue of jurisdiction is not simply domestic confusion in the industry, but a functional loss of potential.

In September 2025, the DAE petitioned the Environment Ministry to exempt thorium extraction and uranium mining from public consultation requirements, framed as necessary "to facilitate early operationalisation of mining projects"; a CSTEP researcher characterized the move as a signal of more private partnership to come in the nuclear space.24 Such was a step toward liberalization but not the functional creation of it; steps towards a project do not equate to a completed project. As such, no public reporting documents any actual extraction or processing under the March 2025 expansion, whereas IREL's own next capacity addition, a monazite processing plant at Gudur in Andhra Pradesh with 10,000 tonnes of annual capacity, remains a state-run facility slated for commissioning in 2026, not a private one.25 Therefore, this lock on minerals is present despite attempted reform, and the exploration of monazite, while beneficial, is nowhere near as valuable as extraction or processing, which create real wealth.

Should commercial-scale domestic processing follow the NCMM seven-year plan, while the REE remains for that duration outside of the NCMM funds, then India functions as a long-term diversification partner in that it will retain resources, but not a short-term solution for the West to escape dependence upon China's hold on critical minerals. Western sourcing thereby should assume that India will remain a long-term strategic partner in resources, but not a short-term remedy to the geopolitical tensions of the present. The corresponding relevance of critical minerals in that timeline is also unclear, as it is possible technologies adapt and change as a result of critical mineral inaccessibility. The two mineral streams are fundamentally on different timelines; lithium and nickel processing, under the incentive scheme, is an unencumbered extraction plan which will be carried out without complication. A Western trading partner is able to trade with India for such minerals under the Ministry of Mines without problem, the long term complications arise with minerals such as monazite and those directly around the beach sands, due to the role of AMCR and DAE control. The Malaysian Lynas plant by contrast, has remained functional since 2012, and has been renewed until 2036; keyly under a requirement of 2031 waste reduction.26 India, by contrast, has no comparable operations, and the March 2025 reforms do not halt the potential issues with extraction; they only delay the benefits. Extraction under requirements is a more effective solution by providing access to minerals which can readily enter the market; an establishment of processing plants through funding, and a positive cash flow for the regions. The role of mere observation and exploration achieves very little in long-term atomic security, while raising the risk of critical mineral scarcity as a result of Chinese-controlled mineral processing.

The planning recommendation that follows is straightforward: Western partners should treat India as a complement to, rather than a near-term replacement for, existing Chinese processing dependency, and should calibrate procurement and investment expectations to the two-track timeline described throughout this brief. Should any major changes occur in policy or organization of the institutions and the corresponding extraction of beach sands, then a reconsideration should be corresponding.

Chokepoints are the way of the modern world: competition, processing, wealth absorption, and geostrategy reconcile in a singular strategy of control. All strategies fundamentally come down to that world: control; nonetheless, chokepoints are an effective and efficient strategy to limit and control adversaries. Critical minerals serve as a vital chokepoint which China grips tightly through processing capability; while India possesses minerals, it lacks that processing capability. While the nation is slowly building that capacity, it ultimately must rectify the division of resources between the DAE and NCMM funds to provide the best of both worlds. The Western powers must treat India as a short- and long term asset for such capabilities, an untapped mineral deposit, but one which requires action to be able to produce actual output.

Notes & References