Key facts
- India has launched a 72.8 billion rupee ($764.8 million) initiative to develop a domestic rare-earth magnet industry.
- Companies are questioning the strategy of favoring smaller, vertically integrated plants over specialized large-scale operations.
- A primary concern for investors is the long-term access to critical raw materials, especially heavy rare earths.
- India imports 85-90% of its rare-earth magnets, with China dominating global supply chains.
- The government's scheme aims to bolster national security and economic resilience by reducing dependence on China.
India is pushing to establish a domestic rare-earth magnet industry with a 72.8 billion rupee ($764.8 million) incentive scheme, aiming to reduce its significant reliance on China for these critical materials. The initiative has attracted numerous bidders, but concerns linger among companies regarding the government's strategy of favoring smaller, vertically integrated plants over large-scale specialization.
Industry executives highlight that financial incentives alone are insufficient. The primary challenge lies upstream: securing long-term access to essential raw materials, particularly heavy rare earth elements like dysprosium and terbium, which are crucial for high-performance magnets used in electric vehicles, defense, and aerospace. India currently imports approximately 85-90% of its rare-earth magnet needs, with China controlling about 90% of global processing capacity.
Companies like Nexon Geochem, partnering with Russia's Giredmet for technology, emphasize the need for indigenous capability-building, combining international know-how with local engineering and R&D. The success of India's plan hinges not only on manufacturing investments but also on ensuring reliable feedstock supplies and policy continuity to foster economic resilience and national security.