Pranay Kotasthane on the Political Economy of Rare Earths and Critical Minerals

Why It Matters

China’s grip on rare‑earth supply threatens global technology security, prompting India to accelerate domestic capabilities and diversify sources. Successful policy and recycling initiatives could reshape the strategic balance in critical mineral markets.

Key Takeaways

• China controls 80% of rare earth production
• India lacks domestic processing capacity, relies on imports
• Recycling could supply 15% of India's critical minerals
• Policy gaps hinder India's critical elements mission
• Geopolitical tensions drive push for supply diversification

Pulse Analysis

China’s rare‑earth monopoly has become a cornerstone of its geopolitical leverage, supplying over three‑quarters of global output and dictating prices through its integrated mining‑to‑refining chain. This concentration exposes downstream industries—from smartphones to electric‑vehicle motors—to supply shocks, prompting governments worldwide to reassess their dependence on a single source. For businesses, the risk translates into higher procurement costs and potential regulatory constraints, making diversification a strategic imperative.

India’s response, articulated through the Critical Elements Mission, combines targeted auctions, incentives for domestic processing, and a push for strategic stockpiles. However, the country faces a stark capability gap: limited mining assets, nascent refining infrastructure, and fragmented policy coordination. By aligning industrial policy with private‑sector investment, India aims to climb the value chain, moving from raw‑material importation to value‑added manufacturing, which could catalyze job creation and technology transfer.

Recycling emerges as a pragmatic bridge between current deficits and long‑term self‑sufficiency. Estimates suggest that recovered rare earths and critical minerals could meet up to 15% of India’s projected demand by 2035, reducing reliance on volatile imports. Effective recycling requires robust collection systems, advanced metallurgical techniques, and clear regulatory frameworks. As climate‑friendly circular economies gain traction, firms that invest early in recycling technologies stand to gain competitive advantage while contributing to national security objectives.

Original Description

Today my guest is Pranay Kotasthane (https://takshashila.org.in/people/pranay-kotasthane-cwccs) who is the deputy director of the Takshashila Institution and chairs the High Tech Geopolitics Programme (https://takshashila.org.in/high-tech-geopolitics) .

Pranay co-writes Anticipating the Unintended, (https://publicpolicy.substack.com/) a newsletter on public policy ideas and frameworks, and co-hosts Puliyabaazi, (https://www.puliyabaazi.in/podcast) a popular Hindi-Urdu podcast on politics, policy, and technology. He is the co-author of - Missing in Action: Why Should You Care About Public Policy, (https://www.amazon.in/Missing-Action-Should-Public-Policy/dp/0143459376/ref=sr_1_1?keywords=pranay+kotasthane&qid=1673242114&s=books&sprefix=pranay+kotas%2Cstripbooks%2C243&sr=1-1) When the Chips are Down, and the graphic nonfiction narrative We, the Citizens (https://takshashila.org.in/books/we-the-citizens-strengthening-the-indian-republic-pranay-kotasthane-anupam-manur-khyati-pathak) .

We spoke about rare earths and critical minerals, China's dominance, the gap between India's ambitions and opportunities, the potential for recycling, and much and more.

Recorded February 2nd, 2026.

Read a full transcript (https://www.mercatus.org/ideasofindia/pranay-kotasthane-political-economy-rare-earths-and-critical-minerals) enhanced with helpful links.

Learn more about The 1991 Fellowship (https://www.mercatus.org/1991-fellowship) .

Connect with Ideas of India

Follow us on X (https://twitter.com/ideasofindia)

Follow Shruti (https://twitter.com/srajagopalan) on X

Follow Pranay (https://x.com/pranaykotas) on X

Click here (https://mercatus.tfaforms.net/5060934) for the latest Ideas of India episodes sent straight to your inbox.

Timestamps

(00:00:00) - 1991 Fellowship (00:01:11) - Intro (00:02:59) - Rare Earths versus Critical Minerals (00:10:15) - Why Are Rare Earths and Critical Minerals So Important Now? (00:29:29) - Geopolitical Uncertainty (00:33:14) - China's Process Advantage (00:44:10) - Industrial Policy (00:48:10) - India's Critical Elements Mission (00:53:00) - Auctions (00:56:53) - India's Position in the Value Chain (01:04:36) - Recycling (01:34:04) - Law of One Price (01:41:28) - Pakistan and Rare Earth Reserves (01:46:26) - Outro