India Targets Rs 1,345 Crore Initiative to Compete with China in Rare Resources
Amid ongoing supply challenges for rare earth materials from China, India is taking significant steps to bolster its domestic production of rare earth magnets. The Indian government has earmarked ₹1,345 crore to establish local manufacturing capabilities, as announced by Heavy Industries Minister HD Kumaraswamy. This initiative comes in response to China’s recent export controls on several rare earth elements, which have raised concerns about supply chain security for critical industries in India.
India’s Strategic Move to Secure Supply Chains
India has been heavily reliant on imports for its rare earth magnets, sourcing over 80% of its 540 tonnes from China in the last fiscal year. The recent tightening of regulations by Beijing, which now requires exporters to obtain permits and provide documentation regarding the end use of these materials, has prompted Indian officials to act. The Ministry of Heavy Industries has emphasized the importance of this initiative for securing supply chains, especially since China dominates more than 90% of global magnet processing capabilities. Rare earth magnets are crucial for a variety of applications, including electric motors, braking systems, smartphones, and missile guidance technologies. According to the US Geological Survey, while China holds the largest reserves of rare earth elements at approximately 44 million tonnes, India ranks third with reserves estimated at 6.9 million tonnes.
Collaboration Between Ministries and Industry
The Indian government is actively working to develop guidelines that will encourage domestic manufacturing of rare earth magnets and minerals. This effort involves collaboration between the Heavy Industries and Mines ministries. The draft scheme for processing rare earth magnets has already been distributed for inter-ministerial review, signaling a move towards detailed policy implementation. The initiative aims to incentivize both private and state-owned enterprises to build local capabilities across the entire supply chain, from mineral extraction and processing to the actual manufacturing of magnets. This comprehensive approach is designed to reduce dependency on foreign sources and enhance India’s self-sufficiency in critical technologies.
Interest from Major Indian Companies
Several Indian companies have expressed interest in participating in the domestic production of rare earth magnets. Notably, automotive giant Mahindra & Mahindra and component manufacturer Uno Minda are exploring opportunities to establish local magnet production facilities. Mahindra has indicated a willingness to collaborate with established manufacturers or secure long-term supply agreements with domestic producers, driven by its growing demand for magnets in its expanding electric SUV lineup. Uno Minda, a key supplier to major manufacturers like Maruti Suzuki, is also keen on contributing to domestic production efforts. These developments follow Sona Comstar’s earlier initiative, marking a growing trend among Indian firms to invest in local magnet manufacturing. However, officials note that final investment decisions will hinge on the incentive structure of the scheme and access to necessary raw materials.
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