India is seeking to diversify its sourcing network for new-age manufacturing for which it has set ambitious targets. But China’s grip over India’s clean-energy and advanced manufacturing supply chain is only getting stronger.
The northern neighbour controls more than 84% of India’s lithium-ion battery imports, 78% of permanent magnet supplies and over half of lithium carbonate imports. This sets the context for India’s newly signed critical minerals framework with the United States.
India’s imports of selected critical minerals and rare earths rose 6.45% year-on-year to $521.75 million in FY26 from $490.12 million in FY25 as demand accelerated from electric mobility, battery storage systems, semiconductors, electronics and renewable energy manufacturing.
ALSO READOutlook for FY27 remains extremely vulnerable to geopolitical risks , says RIL
Analysing Import Bill
The India-US critical minerals framework signed on May 26 seeks to gradually reshape supply chains across mining, refining, processing, recycling and strategic investments as both countries attempt to build “trusted” alternatives to China-dominated networks. The scale of China’s dominance remains particularly visible in downstream manufacturing ecosystems that determine global clean-energy economics.
Permanent magnets — critical for EV motors, wind turbines, electronics and defence systems — remained India’s largest import category among selected critical minerals at $221.66 million in FY2026, up from $206.26 million in FY2025. China alone accounted for 78% of imports, while the US contributed just 1%. In rare earth metals, India imported $3.44 million worth during FY2026, with China accounting for 68% of supplies and Japan 27%. The US share remained only 1%.
An analysis by Rubix Data Sciences showed China accounted for more than 84% of India’s lithium-ion battery imports during FY2026, underlining India’s dependence not only on raw materials but also on processed battery ecosystems and integrated manufacturing supply chains.
In lithium carbonate — a key battery raw material used in EV and storage batteries — India imported $12.64 million worth during FY2026. China controlled 51% of supplies, while the US accounted for 14%, making it one of the few categories where America already has a visible presence in India’s import basket. Lithium hydroxide imports rose to $25.49 million in FY2026 from $23.29 million in FY2025. Argentina accounted for 33% of imports, Belgium 23%, China 16% and the US only 1%.
Imports of germanium and other strategic metals increased to $87.68 million from $76.93 million a year earlier. China accounted for 33% of supplies, South Korea 14% and Russia 11%, while the US share remained at 2%. Rare earth compounds imports more than doubled to $23.03 million in FY2026 from $11.18 million in FY2025. Japan accounted for 44% of supplies, South Korea 19%, China 16% and the US 3%.
ALSO READEY Economy Watch warns India of multiple economic shocks amid West Asia crisis, global slowdown
India also imported $83.77 million worth of rare earth ores and concentrates during FY2026, with the UAE supplying 49%, China 28% and the US only 1%.
Queries sent to the Ministry of Mines on how the India-US critical minerals partnership could help reduce India’s dependence on concentrated supply chains remained unanswered till press time.
Tushar Bhaskar, President at Rubix Data Sciences, said the India-US framework was more about diversification and strategic resilience than replacing China immediately. “China currently controls about 60% of global rare earth reserves and processes nearly 90% of global supply, giving it overwhelming leverage in downstream sectors such as permanent magnets, EV batteries and clean-energy technologies,” Bhaskar said. “The significance of the pact lies more in diversification and strategic resilience than in replacing China outright,” he added.
Policy Interventions
India currently produces only four critical minerals — copper, graphite, phosphorus and titanium — because of limited exploration, weak infrastructure, and a lack of advanced processing technologies.
Rajib Maitra, Partner at Deloitte India, said India and the US could leverage complementary strengths across mining, processing, refining and downstream manufacturing over the next decade.
“A key initiative is the launch of the National Critical Mineral Mission with an outlay of ₹34,300 crore, while the Ministry of Heavy Industries has launched a dedicated ₹7,280-crore scheme to promote manufacturing of sintered rare earth permanent magnets,” Maitra said.
He added that India had identified three hard rock rare earth deposits containing an estimated 1.29 million metric tonnes of rare earth oxides in Rajasthan and Gujarat, creating opportunities for collaboration with the US in extraction and downstream processing technologies.
Saloni Sachdeva Michael, Lead Energy Specialist at India Clean Energy Transition, said China’s dominance extends beyond mining into refining and manufacturing. “China’s dominance in critical minerals is not just about owning mines; it rests on controlling the processing and manufacturing steps between the mine and the market,” she said. “Even ore dug in Australia or Africa often passes through Chinese refineries and magnet plants before it enters global supply chains,” Michael added.
Analysts said the success of the India-US framework would depend less on immediate trade shifts and more on building long-term refining, recycling, processing and manufacturing ecosystems capable of gradually reducing India’s dependence on Chinese midstream and downstream supply chains.
TOPICSChinaimport dutyThis article was first uploaded on May twenty-eight, twenty twenty-six, at thirteen minutes past seven in the evening.