India, Feb. 15 -- Every once in a while, headlines strike of India striking gold. Just that it's not gold-but lithium, or some other rare earth element that holds the potential to change the country's future. The script is now predictable. A government agency makes an announcement. Experts rush in to explain how this could be a game-changer. Stocks of battery companies rise. Politicians talk about self-reliance and reducing dependence on China. And then, the story fades, people forget, and India continues importing the very same materials, mostly from China, because the reality is far more complicated than the headline.

The discovery of lithium reserves in Jammu & Kashmir was supposed to be a turning point. The initial announcement-5.9 m...