India Sparks a Rare Earth Revival as China Turns Off the Tap

Image Source: The Economic Times

Key Developments

India is accelerating proposals to increase rare earth magnet production locally after China, which dominates more than 90% of world supply, imposed fresh export curbs that have left Indian auto makers and electronics producers with acute shortages.

The Ministry of Heavy Industries has scheduled a high-level stakeholder meeting on June 3 to seal a new scheme that provides financial incentives, public-private partnerships, and international collaborations to develop a sustainable rare earth magnet ecosystem in India.

Industry captains have warned that stocks of these magnets—a critical component for electric vehicles, wind turbines, and common electronics—may deplete in a matter of days, risking choking the country's production lines.

Industry Impact

China's export restrictions, brought into force in April, have already put shipments on hold and clogged up processes, with Indian auto sector officials scrambling to Beijing for expediting clearances.

Automakers such as Bajaj Auto and top EV startups say that unless supplies are reinstated soon, car production would be seriously hurt by July, as close to 85-95% of rare earth materials are imported from China.

The crisis has led several manufacturers to diversify their sourcing, seeking out other Asian nations, but alternatives are still limited and costly.

Strategic Steps

India's response is:

Economic incentives for businesses that move into the rare earth industry

Setting up processing and magnet manufacturing plants as part of public-private partnerships

Pursuing alternative global sources and recycling technologies, including joint ventures with the UK

Large projects like the Trafalgar Group's new Gujarat plant are expected to meet up to 20% of domestic demand by 2027.

The government is also investing in R&D and ramping up green production technologies for increasing self-reliance.

Market Outlook

India's rare earth magnet industry is likely to expand from $637 million in 2024 to almost $1 billion by 2033, fueled by clean energy, electric mobility, and policy incentives.

Experts hold the opinion that although the existing crunch highlights weaknesses, it is also a driver for India to create a strong, future-oriented supply chain of strategic minerals.

Sources: Financial Express, Business Standard, Economic Times, KNN India, CNBC TV18, New Indian Express, IMARC Group