Myanmar's rare earth reserves could, in time, become an important long-term strategic hedge for India as New Delhi seeks to diversify supplies of critical minerals away from China.

In the short term though experts point to infrastructure constraints and political risks in the war-torn country as meaning that any new supply chains are unlikely to be put in place any time soon.

According to S&P Global, India and Myanmar have already agreed to increase existing cooperation on sectors including mining, trade and the all-important investment of rare earths. This came about following talks between Myanmar’s junta chief President Min Aung Hlaing and Indian Prime Minister Narendra Modi in New Delhi on June 1.

And while no actual supply agreement was signed at the time, India's Foreign Secretary Vikram Misri said the two sides also discussed cooperation in the rare earths sector.

Like many other countries, India is seeking to strengthen its domestic critical minerals supply chain as part of efforts to reduce reliance on China and Beijing’s overbearing dominance of the global rare earth industry.

But with Myanmar one of the world's leading producers of heavy rare earth elements, the need to contend with weak domestic and international infrastructure as well as China's entrenched influence in Naypyidaw is evident. The military control exercised by armed groups over key mining regions as a long-standing civil war rages adds another layer of danger to the issue.

Despite those obstacles, there are analysts who believe engagement with Myanmar could eventually broaden India's supply options if handled carefully – even if some say the world’s largest democracy should not be negotiating with a military junta who deposed a democratically elected neighbour. At the same time practicality points to doing so as strengthening long-term supply chain resilience.

Myanmar is already recognised as amongst the world's largest producers of dysprosium and terbium according to S&P Global, and given that these metals improve the performance of permanent magnets used in electric vehicle motors, wind turbines and advanced defence systems they are crucial to a range of New Delhi business sectors on many levels.

Added to this, International Energy Agency (IEA) data shows that Myanmar and China together account for about 83% of global mined supply of heavy magnet rare earth elements – a point which only shines a spotlight on the importance attached to these elements.

Another issue stems from most of Myanmar's production coming from Kachin state in the country's far north, which borders China; a region partly controlled by the Kachin Independence Army (KIA), the chief executive of the US-based critical materials company K66 has claimed.

After the KIA seized control of the state's main mining towns in late 2024 in the third year of the war, China's imports of heavy rare earths from Myanmar declined, with data from S&P Global Market Intelligence's Global Trade Analytics highlighting the reality on the ground that Myanmar accounted for a full 52.8% of China's total rare earth imports the year after - down from almost 60% the year before. China was reported as then entering negotiations with the KIA to facilitate access to supplies from Kachin.

China has also demonstrated its influence over the wider rare earth sector through export restrictions as is widely reported. IEA data shows China accounted for 91% of global rare earth refining capacity in 2024 in addition to 94% of magnet manufacturing capacity – numbers the US, EU and others are desperate to see reduced.

As a result, these restrictions prompted India, the US, Japan and other countries to seek alternative sources and put in place supply chains less dependent on China.

This in turn culminated in Myanmar's rare earth resources representing a worthwhile strategic hedge for India, even as war rages in the country and democratically elected leaders languish in jail or under house arrest.

But even if a deal is negotiated with Naypyidaw, at present, India lacks the processing capacity required to make immediate use of materials coming in from across the 1000 mile border with Myanmar. To this end, any deal with Myanmar offers greater value as a reserve option in the long-tern, than as a near-term source of supply.

And while India shares a border with Kachin state, although no transport links currently connect the two areas and the terrain is mountainous and largely impassable, it is unlikely New Delhi will follow in China’s footsteps and reach out to deal with the KIA direct. Not openly at least.

Even so, closer cooperation with Myanmar on any level would support India's ambitions to develop its own rare earth industry. Under the National Critical Mineral Mission launched in 2025, India has stated it plans to complete four mineral processing parks by 2030-31.

Steady cooperation with both Myanmar's ruling junta and the KIA would therefore be necessary in the coming years if India hopes to secure greater access to rare earth supplies.

Adding another layer to the issue, India's participation in the Quad Critical Minerals Initiative Framework alongside Australia, Japan and the US could further accelerate its ambitions even if the Quad is deemed geopolitically inert on some levels; the four countries having agreed to mobilise $20bn in funding for eligible critical minerals projects.

Complicating this, however, are US sanctions on Myanmar – the most influential Quad member but also the party showing the least interest in the group since President Donald Trump has come to power.

Even if, as experts have suggested, potential Quad support could help India establish processing facilities in its north-eastern states closest to the Kachin border, new or additional US sanctions on Myanmar imposed on a whim by President Donald Trump could end a project before it has even begun.

As such, while India for its part though has maintained a level of diplomatic engagement with Myanmar despite widespread international criticism of Min Aung Hlaing – an issue many in the country find hard to swallow given its frequent chestbeating as the world’s biggest democracy – New Delhi must tread carefully.

By hosting Min Aung Hlaing earlier in the year, India also attracted international criticism after the junta leader had been shunned by the international community – even China – until his June visit to meet Modi.

The question the government of Prime Minister Modi must now ask itself is whether or not it would be willing to sacrifice a much-lauded claim of respect of democracy and the rule of law, to access raw earths from a junta-led neighbour.