Since Operation Epic Fury - the US-Israeli strikes that killed Supreme Leader Khamenei on February 28 - Iran’s Revolutionary Guard has shut down the Strait of Hormuz, the world’s most consequential waterway. Brent crude hit $126 a barrel. India, sourcing roughly 50% of its crude and 40% of its fertiliser from Gulf producers, could be looking at a shock that could push the rupee past 95 to the dollar. How cheaply Iran achieved it is what makes it instructive - no warships, no mines, just a few drone strikes near the shipping lanes, and insurance underwriters pulled out overnight. Traffic dropped 95% not because ships couldn’t pass, but because no insurer would cover the risk. The threshold for the next disruption, wherever it occurs, is now dramatically lower than we imagined.
The world has been here before, and every time, the same promise is made - reduce dependence, diversify supply, build resilience - and every time, the promise dissolves into the next budget cycle once prices fall. What is different this time is the timing. The EV transition is being sold as energy independence, freedom from the Gulf, no more hostage situations in narrow straits. It is a compelling story and largely untrue. What the EV transition actually does is relocate dependency - from desert oil fields in Arabia to rare earth mines in China’s Inner Mongolia, from the Strait of Hormuz to the processing plants of Ganzhou. The mine shifts. The structural vulnerability does not.
China’s Processing Grip
According to the IEA’s Global Critical Minerals Outlook 2025, China controls over 90% of refining capacity for both graphite and rare earth elements, processes around 60% of global lithium and cobalt, and together with Indonesia accounted for 90% of all new nickel refining capacity added in 2024. India imported 93% of its rare earth permanent magnets from China in FY2024-25, with stockpiles estimated to last two to three weeks if Beijing tightened exports. When China imposed licensing requirements on rare earth magnets in April 2025, Bajaj Auto and Maruti Suzuki immediately flagged production bottlenecks. The October 2025 Ministry of Commerce Notice No. 61 went further, extending extraterritorial jurisdiction to any product containing even trace amounts of Chinese-origin rare earths - meaning a car assembled in Chennai using a Chinese-processed magnet could technically require a Beijing export license. If this sounds like the Hormuz situation wearing different clothes, that is because it is precisely that.
Aluminium-Air Batteries
But India need not simply be a victim in this game. There are options to explore. One of the most immediate escape routes sits inside our own borders. India is the world’s second-largest aluminium producer, with massive bauxite reserves in Odisha. Aluminium-air batteries - which use aluminium plates as the anode, ambient air as the cathode, and produce electricity through oxidation - offer energy density five times that of lithium-ion, are non-flammable, and carry near-zero Chinese supply chain exposure. The IOC-Phinergy joint venture between Indian Oil and Israeli firm Phinergy is already deploying these systems commercially, with 300 units contracted for Indus Towers’ telecom backup power in 2023. Chakr Innovation, backed by ONGC with a ₹193 crore Series C, is extending the technology to two-wheelers, pallet trucks, drones, and grid storage. The non-rechargeability problem - the technology’s main limitation - is being addressed by NALCO and CSIR-CECRI, who are working on a rechargeable variant. The entire supply chain from bauxite mine to battery assembly sits within Indian borders. This is not a moonshot. It exists, it is being commercialised, and it deserves the kind of coordinated urgency that we have thus far reserved for crises rather than prevention.
KABIL and the Mineral Diplomacy Race
The second move involves securing what we cannot produce domestically. KABIL - Khanij Bidesh India Ltd - is India’s most underappreciated strategic instrument right now. It has signed an exploration contract in Argentina’s Catamarca province for lithium, signed an MoU with Australia’s Critical Mineral Office for cobalt and lithium, and signed an NDA with Chile’s state-owned ENAMI for lithium exploration. A trilateral pact with Canada came through in November 2025. Japan’s Toyotsu Rare Earths India is in discussions with IREL for neodymium supply. These are genuine starts. But the pace remains bureaucratically leisurely relative to the stakes - every quarter of delay is another quarter in which Chinese firms lock in upstream deposits across Africa and Latin America. CATL and CITIC signed a $2.8 billion deal for Bolivia’s lithium - the world’s largest deposit - in 2023. Chinese companies have built most of Indonesia’s HPAL nickel processing capacity. The playbook is familiar, and KABIL needs to operate like a crisis instrument rather than a government PSU on a five-year planning cycle.
The Stockpile Gap
Third, and embarrassingly simple: India needs strategic mineral stockpiles. We hold about 37 million barrels of crude in emergency petroleum reserves. We hold essentially no strategic buffer of processed lithium, cobalt or rare earths, despite comparable import dependence. Building a 90-day buffer of critical minerals is not a grand vision - it is basic industrial hygiene for a country targeting 30% EV penetration by 2030 and already importing around 2–3 billion USD of lithium‑ion batteries each year, the bulk of them from China..
India’s Monazite and Thorium Cards
Now for the genuinely contrarian question - can India create chokepoints for China rather than only suffering them? Start with what is sitting on our beaches. India’s Atomic Minerals Directorate estimated in January 2026 that India holds 13.15 million tonnes of monazite containing 7.23 million tonnes of rare earth oxide - making us the third-largest REE reserve holder globally at roughly 6-8% of total reserves. We produce less than 1% of global REE output, not because of geological bad luck but because a 75-year government monopoly over monazite, with tentative steps towards opening the sector beginning in the mid-2020s, strangled private investment entirely. That window is now open at precisely the moment when every major industrial democracy is hunting for a non-Chinese REE alternative. The EU’s Critical Raw Materials Act, the US Minerals Security Partnership, Japan’s IREL partnership through Toyotsu Rare Earths India, and Australia’s Critical Minerals Investment Partnership are all, at their core, waiting for India to build a fully integrated REE processing corridor - coastal sand to separated rare earth oxides to finished neodymium magnets. If India does this, it becomes simultaneously indispensable to the US, EU, Japan, and Australia. That is structural leverage of a kind we have never held in energy markets. The same monazite sands also carry thorium as a co-product - India holds 25% of global thorium reserves, and the country that masters the complete thorium fuel cycle first - India’s Prototype Fast Breeder Reactor at Kalpakkam is the first step in that journey - will hold OPEC-grade influence over clean nuclear energy through the second half of this century.
The Afghanistan Opportunity
Then there is Afghanistan - the most unexpected opportunity of all. Afghanistan holds an estimated $1 trillion in mineral wealth including lithium, cobalt, and rare earths, much of it barely surveyed. China has been positioning itself as the Taliban’s primary economic partner. But India did hold the Chabahar key: a 10-year port operating agreement with Iran signed in May 2024, which is the only trade corridor into Afghanistan that bypasses Pakistan entirely. The Taliban has actively approached India for mineral investment because it wants economic alternatives to Beijing, and India carries historical goodwill - roads, schools, the Salma Dam - that Chinese capital simply cannot replicate. This is perhaps the one geography where India can establish upstream access to critical minerals before Chinese processing contracts lock in the deposits, through a route China cannot interdict. India’s Chabahar-Afghanistan corridor is a strategic instrument we have been inexplicably reluctant to use at full intensity.
Water as Counter-Leverage
Finally, the mechanism nobody discusses: water as counter-leverage. China is building the Yarlung Tsangpo dam complex - a $137-170 billion project at the Great Bend of the Brahmaputra, 30 kilometres from India’s border, generating three times the power of the Three Gorges Dam and giving Beijing hydraulic command over a river that supplies 30% of India’s freshwater and 40% of its hydropower potential. China uses this upstream position as silent coercive leverage - withholding hydrological data during the Doklam standoff. What India has not done is respond in kind through the one multilateral instrument available: the UN Convention on the Law of Non-Navigational Uses of International Watercourses, whose norms China has declined to ratify but which shapes the global conversation. Vietnam, Thailand, Cambodia, Laos, and Bangladesh all suffer the same Chinese upstream dam-building on Tibetan-origin rivers. India could assemble a formal downstream riparian coalition that names Chinese hydrological coercion in international forums, creating sustained diplomatic exposure for Beijing every time it adjusts a sluice gate in Tibet. Water leverage is not symmetric - but deployed consistently through multilateral legal architecture, it forces China to calculate costs it currently does not face at all.
The aluminium is in our smelters, the monazite is on our beaches, the thorium is in our sands, the Chabahar key is in our hand, and the downstream riparian coalition is there to be assembled - what we need now is not another crisis to make this urgent, because the crisis is already here.