India Pursues Self-Reliance in Rare Earth Magnet Production
India is taking significant steps to address the rare earth magnet supply crisis, aiming to lessen its dependence on China. Heavy Industries Minister H D Kumaraswamy announced plans to boost domestic production and introduce incentives for local manufacturers. Notably, Hyderabad-based Midwest has pledged to produce 500 tonnes of rare earth magnets by the end of this year, with plans to increase output to 5,000 tonnes in 2024. This initiative comes in response to supply disruptions caused by China’s export restrictions, which have impacted various sectors, including electric vehicles and defense.
Domestic Production Initiatives
The Indian government is actively working to enhance domestic production of rare earth magnets, which are essential for various industries. Minister Kumaraswamy highlighted that the government is collaborating with local companies to ramp up production capabilities. Midwest, based in Hyderabad, has committed to producing 500 tonnes of magnets by the end of this year, with an ambitious plan to scale up to 5,000 tonnes in the following year. This move is part of a broader strategy to ensure a stable supply of these critical materials, which have faced disruptions due to China’s recent export restrictions.
To further support this initiative, the government is developing a dedicated incentive scheme aimed at subsidizing magnet processing units within India. Officials have indicated that this scheme could be finalized within the next 15 to 20 days. The proposed subsidies are designed to offset the cost advantages that China currently holds in the rare earth magnet market. Stakeholder consultations are ongoing, with suggestions for subsidy rates ranging from 20% to 50%. If the subsidy outlay exceeds Rs 1,000 crore, the proposal will be submitted to the Union Cabinet for approval.
Strategic Sourcing and International Collaboration
In addition to boosting domestic production, India is exploring international partnerships to secure a stable supply of rare earth magnets and raw materials. The government is actively seeking to source these materials from countries such as Japan and Vietnam. This strategy aims to mitigate the risks associated with over-reliance on Chinese exports, which currently dominate the global market for rare earth magnets.
Despite earlier concerns from the automotive sector regarding potential supply shortages, government officials have reported that the situation is improving. As of now, no manufacturers have reported production halts due to magnet shortages. To alleviate immediate pressures, the government has allowed imports of fully assembled magnet components from China under existing exemptions in the auto and electric vehicle incentive schemes. Recently, 30 automotive companies sought approval from the Directorate General of Foreign Trade (DGFT) to import magnets from China to prevent disruptions in their production processes.
Government’s Commitment to Self-Reliance
The Indian government’s commitment to achieving self-reliance in strategic materials is evident in its recent initiatives. Minister Kumaraswamy, along with Mines Minister G Kishan Reddy, chaired an inter-ministerial meeting earlier this month to align policies across key departments. This collaborative effort aims to strengthen India’s rare earth value chain and reduce dependence on foreign sources.
Under the National Critical Mineral Mission, the government is adopting a comprehensive approach to enhance the domestic production of rare earth materials. Officials have pointed out that China currently controls over 90% of the global rare earth magnet processing capacity, maintaining its dominance by keeping prices low. This situation underscores the urgent need for India to develop its own production capabilities, supported by government-backed subsidies to create competitive alternatives in the market.
As India navigates these challenges, the focus remains on establishing a robust domestic supply chain for rare earth magnets, ensuring that the country can meet its growing demands in sectors such as electric vehicles and defense without relying heavily on imports.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
