Since the birth of the nuclear age, the beach sands of peninsular India have attracted much attention. Every day, the sea washes up on the beaches of Kerala, Tamil Nadu, Andhra Pradesh, and Orissa valuable deposits of minerals that had been carried to the sea from the Ghats by natural erosion through sun, wind, and rain. Soon after independence, the new government brought the sands under national control due to their significance in nuclear technology. Some small exports were allowed but only to secure vital technology or cooperation in the nuclear arena.

In 1998, private companies were invited to enter the beach sand mining sector and six of the seven minerals – garnet, ilmenite, leucoxene, rutile, sillimanite, and zircon – were deregulated. Only monazite remained under the purview of the Department of Atomic Energy due to its uranium and thorium content. Since then, production has increased 80 percent and the export value of beach sand minerals has skyrocketed from Rs 35 crores in 1998 to Rs 4,500 crores in 2015. Yet despite having some 35 percent of the global deposits, India still lags significantly behind other global players such as Australia in production. One benchmark the industry uses is the ratio of extracted ore to proven deposits, known as the production reserve ratio – in India, that number is 0.0018 percent while Australia is substantially ahead at 0.01 percent.

The potential for capacity expansion and value addition in the six deregulated minerals notwithstanding, the miracle story lies in the seventh and as yet controlled atomic mineral, monazite. Although famous for its thorium content, monazite has actually only eight percent of the fissile element; the rest is composed of 0.3 percent uranium, 65 percent rare earth elements, and phosphates. After bastnäsite, the mainstay of Chinese rare earth mines, monazite is the richest source of rare earth elements and the rare earth ore most common in India.

The rare earth elements are 17 in number and as their collective name suggests, found only in very small quantities in the earth’s crust. These elements have magnetic, thermal, and electrical properties that find useful applications in several vital industries such as communications, electronics, transportation, energy, aerospace, and armaments. Some of the applications represent cutting edge technologies that could determine the material evolution of society. For example, more efficient LEDs that have already been designed are yet to leave research laboratories for want of europium and terbium in commercial quantities. Similarly, the non-availability of neodymium and dysprosium have delayed the replacement of gearbox-driven wind turbines by more efficient direct-drive units. The widespread embrace of these technologies would go a long way in meeting not just India’s stated climate change goals but also its infrastructural development goals through efficient lighting. Other applications find place in industries projected to grow exponentially over the next few decades. For example, smartphones have proliferated like wildfire in the last few years and demand is only expected to increase in the coming years; these ubiquitous gadgets, however, rely on neodymium, europium, and cerium for their speakers and screens.

Rare earth elements also find use in some of the technologies that can truly be said to be of the future. For example, Tesla has been experimenting with practical energy storage not only for its cars but also for renewable energy sources and electricity grids. Rare earths are key to some of the concepts and designs the company has developed. Easy access to rare earth may well entice Tesla to come and set up shop in India, bringing with it not just its technology and capital but also a demand for quality labour that dovetails well with the Make-in-India and Skill Development schemes that the Modi government has been trumpeting over the past couple of years.

Indeed, the ambitious may well look beyond the arrival of hi-tech multinationals like Apple and Tesla to Indian shores to the time when India will be able to produce its own Apples and Teslas for the global market. With the world’s attention turning to the environmental costs of 20th century growth, demand for commodities like rechargeable batteries, catalytic converters, fluid-cracking catalysts, hybrid vehicles, and stronger magnets are only expected to grow in the coming years. India can well emerge as a vital hub in the network of futuristic industries and technologies.

There is reason for optimism in the development of India’s rare earths industry: the world market is dominated by China, responsible for almost 98 percent of international exports and Beijing’s restrictive policies have raised concern in Tokyo, Washington, and the capitals of other major industrial powers. Wit everyone looking for other sources of these strategic elements, an Indian foray into the market would not just be welcomed but possibly nurtured by other industrial countries. Given the importance of the elements, India may even be able to import the latest technology for the safe and efficient extraction of rare earths to develop its own industry.

The technological manna, the economic bonanza, and the contribution to labour markets and skill development that would result from private sector participation in monazite processing is undeniable. Yet with uranium and thorium as by-products, there is, however, an unfounded fear of private players handling nuclear materials. First, private firms play an important role globally in the mining and processing of nuclear materials; corporations are even allowed to own and operate nuclear power plants and their record has so far been exemplary. Second, it would be easy for the Atomic Energy Regulatory Board to regularly audit or supervise the processing of monazite until the uranium and thorium are separated. The government can then buy the fissile material from the private sector to fuel its nuclear reactors. With plans to boost nuclear energy to 63 GW by 2030, this would offset the demand for imported uranium.

India stands on the cusp of another mini-revolution – what information technology was to the 1990s, rare earths promise to be for the 2020s. Development of this sector can drastically alter the global market as well as domestic conditions in strategic, economic, as well as social terms. As a major exporter of such an important resource, India stands to gain some political leverage – as China does today – in its dealings with other powers. All that remains is for Delhi to get over its irrational fear – protectionism? – of the private sector in handling radioactive materials.

But not so fast – the greatest obstacle to India’s development is India itself. Any potential for the processing of monazite in India appears to be a stillborn dream, for the government has recently moved to re-nationalise the rare earths industry. The historical record of the industry is pretty clear that government control over rare earths production will stifle growth, curtail exports, and effectively terminate any prospects of industrial, economic, or social development.

The Mines and Minerals (Development and Regulation) Act of 1957 had categorised all beach sand minerals as atomic minerals. This made them prescribed substances under the Atomic Energy Act and off limits to the private sector. In 1998, the government invited the private sector to participate in beach sand mining in an effort to give a fillip to the industry and the industry grew over a hundred-fold in 15 years; in 2007, six of the seven beach sand minerals were removed from the list of prescribed substances in the Atomic Energy Act.

However, the Atomic Minerals Concession Rules of 2016 has moved to put all the minerals back onto the prescribed substances list, thereby effectively removing them from the private sector domain. Furthermore, the AMCR proposes to reserve all beach sand mineral deposits containing over 0.75 percent monazite for public sector companies; any already operating private mine that is found to contain above this concentration of monazite will have its lease terminated. Needless to say, these retrograde and draconian measures will severely damage the private sector role in beach sand mining.

If, on the other hand, the government were to allow the private sector to mine process not just the six non-radioactive minerals but also monazite, and implement policies that would encourage the production to reserve ratio to climb to 0.01 percent, industry estimates forecast almost a million jobs in direct and indirect employment, capital investments of over Rs 54,000 crores, and Rs 7,100 crores as revenue to the government. Against an annual global demand of 125,000 tonnes, India produced just 300 tonnes of rare earth elements between 2009 and 2014. A recent study done by the Council on Energy, Environment, and Water in conjunction with the Department of Science and Technology has also stated that the production of rare earth elements would significantly contribute to the growth of the manufacturing sector. In fact, the rationale for privatisation in 1998 as expressed in a Department of Atomic Energy report was that the growing demand for rare earths in the domestic and international market made the augmentation of rare earth extraction capability of interest to the country. “However,” the report stated, “this is highly capital intensive and it may not be possible for only the PSUs (both Central and State-owned) operating in this field to set up the new plants on their own. It is therefore necessary to allow the private sector to set up such plants within the framework of some broad guidelines.”

Yet time is running out. Given the geopolitical turmoil caused by Chinese assertion of hard power in recent years, major consumers of rare earth elements such as the United States and Japan are looking furiously for other alternatives. These could be either sources or materials. If they succeed, the demand for Indian rare earths would diminish and an economic as well as strategic windfall would have been missed.

China’s restrictive export policies and substantially higher prices for the export market than for domestic consumption work in India’s favour in that the global community would be eager to see it develop as an alternative source of rare earths to China. Presently, India represents barely two percent of international rare earths trade; there is confidence in the private sector that with appropriate policies, this could easily be raised to 25 percent in a decade. Besides employment and the development of the Indian hi-tech industry, a private-sector-led growth of the rare earths industry promises a healthier foreign exchange balance, and less reliance on imported resources.

The oft-heard argument that atomic resources are a security risk in private hands needs to be once and for all debunked: plenty of private firms are engaged world wide in nuclear activities from mining and processing to operating reactors. Furthermore, security has been a convenient blanket for the government under which to hide incompetence – one look at the defence sector or the nuclear energy industry should be enough. Finally, private companies would most likely be willing to bear the paranoia of the bureaucrats and agree to supervision of their monazite processing facilities by the Department of Atomic Energy. There is no reason to curtail private sector involvement in this lucrative field of the future.

The Modi government has been hailed for bringing in economic reforms, though admittedly in a trickle rather than a flood. Its beach sand mining policy, however, stands in stark contrast to the laurels it has won from economic commentators and harkens back to the days of Jawaharlal Nehru, big, bureaucratic, and opaque public sector units, and a socialistic frame of mind. If this government is serious about its Make-in-India programme, its Skill Development scheme, and its overall development agenda, it cannot afford to throttle an up and coming industry that will be the lifeblood of dozens of technological advancements of the coming decades.

A version of this post appeared on The News Minute on September 17, 2016.