India’s rare earths push finds possible ally in Germany’s wind energy needs

India-Germany partnership got a shot in the arm following German Chancellor Friedrich Merz’s visit last month, his first trip to Asia since taking office. Mr. Merz’s meeting with Prime Minister Narendra Modi was followed by the signing of 19 MoUs and eight key announcements. While defence and economic co-operation took centre stage, a “Joint Declaration of Intent on Cooperation in the Field of Critical Minerals” was also signed.

China has had a chokehold on the rare earths part of critical minerals. Of the 30 critical minerals identified by India, many contain rare-earth elements used in producing rare-earth permanent magnets. These are crucial in industries such as electric mobility, semiconductors, renewable energy sector (wind turbines), aerospace and defence, among others.

India imported over 90% of permanent rare-earth magnets from China in 2025. China has often weaponised this dependency. The Indian automobile industry faced headwinds in July last year when China restricted rare earths supply following its trade dispute with the U.S.

Like India, Germany is also heavily reliant on China for its supply of rare-earth permanent magnets. It has been looking for other partners to make its supply chain more resilient, especially in the offshore wind energy sector.

Offshore wind refers to generating renewable energy using wind turbines installed in large bodies of water, usually in the open sea.

Anindita Sinh, research associate at the Centre for Social and Economic Progress (CSEP), notes the Joint Declaration on critical minerals elevates the Indo-German strategic partnership.

“It builds resilient supply chains through collaborative exploration, R&D, processing, recycling, and joint ventures across India, Germany, and third countries. It also seamlessly integrates into sectors such as defence co-production, green hydrogen initiatives under the Green and Sustainable Development Partnership (GSDP), and semiconductor innovation,” Ms. Sinh said.

Mineral mission

India announced the National Critical Mineral Mission (NCMM) in January 2025 to secure its critical mineral supply chain. This mission, which will run until 2031, has a budget of $4 billion. In November 2025, the Cabinet approved ₹7,280 crore (approx. $800 million) to promote the manufacturing of sintered Rare Earth Permanent Magnets (REPM) with the objective of producing 6000 metric tonnes per annum of REPM till 2031.

In Union Budget 2026-27, Finance Minister Nirmala Sitharaman also announced a dedicated rare earth corridor that includes States such as Odisha, Kerala, Andhra Pradesh and Tamil Nadu. The idea is to promote mining, processing, research, and manufacturing to reduce India’s dependence on imported rare-earth value chains.

These initiatives to build a domestic rare earth supply chain come at a time when Germany and Europe are planning to diversify their reliance on China.

The “Resilience Roadmap for Permanent Magnets” strategy document, released in August 2025 by the German Federal Ministry for Economic Affairs and Climate Action (BMWK) and the European wind industry, noted that over 90% of the permanent magnets needed for wind turbines were sourced from China. The road map plans to have over 30% of the permanent magnet supply from outside China by 2030.

Kira Vinke, head of Center for Climate and Foreign Policy at the German Council on Foreign Relations (DGAP), noted that there could be potential for India as the demand for permanent magnets is high in the offshore wind industry.

“But, European buyers want to see proven reliable outputs at a competitive price, and it may take some time until the emerging Indian magnet industry takes foothold in a way that meets the interests of EU buyers,” said Ms. Vinke.

India is said to have the third-largest deposits of rare earth elements globally, with 6.9 million tonnes of deposits. However, India’s rare earths output accounts for less than 1% of global capacity. Most of India’s rare earth deposits are located around coastal areas in the form of monazite sands and hard rock deposits. It’s no coincidence that the rare earth corridor includes four States lining the eastern coast of India.

The rare earths deposits in India are based solely on inferred reserves, without actual geological mapping or mining, notes Ms. Sinh.

“Exploration has been an underfunded sector in India for a while. There was no investment going in because the capital risks were too high, primarily due to the inferred reserves. No company wants to invest money when they don’t know whether it will actually translate into profit. Making a mine commercially viable in India takes a while,” Ms. Sinh said. Additionally, many of these rare-earth deposits in coastal regions are associated with radioactive elements like thorium, which adds another layer of complexity.

Area of interest

One area that is bringing the two countries to not just explore partnerships in the rare earth magnets sector, but also to scale up its renewable energy ambitions is the wind energy sector.

A German delegation led by Johann Saathoff, Parliamentary State Secretary in the Federal Ministry for Economic Cooperation and Development, visited India in November 2025. During the visit, early-stage discussions on potential collaboration to manufacture rare-earth magnets also took place. The visit coincided with the Windergy India 2025 conference, which focuses on wind energy and wind turbine makers.

Wind turbines need over 200 kg of permanent rare-earth magnets per MW of generated energy. With 90% of the magnet supply coming from China, both countries are vulnerable to fulfilling their 2030 wind energy ambitions – 107 GW for India and 145 GW for Germany.

The German Offshore Wind Energy Foundation (SOW) signed an MoU with the Indian Wind Turbine Manufacturers Association to cooperate on offshore wind development, technology transfer and policy dialogue.

Technology transfer is crucial as India does not currently have offshore wind energy installation. The Ministry of New and Renewable Energy has identified around 70 GW of potential offshore wind capacity around Tamil Nadu and Gujarat. Germany has 9.2 GW of installed offshore wind capacity.

Karina Wuertz, managing director of the Offshore Wind Energy Foundation, believes India could become a reliable partner for Germany in permanent magnets.

“There is a wide range of rare earths where the German industry (not only offshore wind) needs to diversify its suppliers. Specifically regarding offshore, we see tangible benefits both for the German (i.e. engineering consulting services) as well as for the Indian side (i.e. component production),” Ms. Wuertz said.

On January 26, Germany, along with nine other European nations, signed the Hamburg Declaration, which commits to 100 GW of joint offshore wind projects in the North Sea.

“The Declaration focuses on resilient supply chains and India could play a growing role going forward,” Ms. Vinke said.

“There is also a push in Europe to buy European, but especially regarding rare earth and permanent magnet supply chains, India’s announcements of the rare earth corridor and the permanent magnets manufacturing programme are attracting a lot of interest. Importantly, this roll-out needs to happen fast, requires workforce training and also technical cooperation,” Ms. Vinke said.

Germany’s offshore wind capacity stood at 9.2 GW at the end of 2024, and it aims to scale it to 30 GW by 2030 and 40 GW by 2035.

Ms. Wuertz notes that this is an ambitious number that will not be achievable. “The problems with achieving the German offshore wind installation targets are rooted in a structural misfit of the auctioning design as well as in a problem at the interface between legal grounds and spatial planning by the relevant authorities,” Ms. Wuertz said.

Additionally, there has been no implementation of the offshore installation targets with industrial policy measures, including financing, Ms. Wuertz said.

Ms. Vinke also noted that it’s an open question how the higher costs of more diversified supply chains could be accounted for. “This boils down to the point whether companies and consumers are willing and able to pay a security premium to have more diverse sources for their products, and potentially also more sustainably sourced material,” Ms. Vinke said.

The German Offshore Wind Energy Foundation plans to sponsor studies on the scalability of permanent magnets manufacturing in India. “The foundation will do so as long as public funding by the German government is provided,” Ms. Wuertz said.

Technology transfer is an area ripe for collaboration in the rare earths sector as well. “I think most of the potential for India and the EU to partner would be on the downstream, on the refining processing, recycling of rare earths, and also looking at alternative technologies that will not have us bound to these minerals as such,” Ms. Sinh said.

However, Chinese dominance in the rare earths sector will continue for many years to come, according to multiple industry experts.

“The goal is more to reduce this dependency rather than becoming fully independent,” Ms. Vinke.