Highlights
- India approves ₹7,280-crore ($870M) scheme to build 6,000 tonnes/year of integrated rare earth permanent magnet (REPM) capacity.
- The initiative aims to target self-reliance in a sector currently dominated 85-90% by China.
- The initiative addresses a critical supply chain gap for India's booming industries including EV, semiconductor, defense, and electronics.
- These industries are all dependent on high-performance magnets that are currently imported.
- If executed successfully, India could become the fifth major global magnet-manufacturing hub alongside China, Japan, U.S., and Europe.
- This would offer allied nations a non-Chinese magnet source in Asia.
India has taken a decisive step to plug one of its most strategic industrial gaps: rare earth permanent magnets (REPM). With a ₹7,280-crore ($870M) national scheme approved for end-to-end REPM manufacturing, New Delhi is signaling it intends to compete—seriously—with the world’s dominant magnet producers.
That means China, Japan, and the U.S. The plan is ambitious. It aims to build 6,000 tonnes per year of fully integrated magnet capacity across five bidders, supporting everything from rare earth oxides to finished NdFeB magnets. For a country importing nearly all high-performance magnets, this is a structural pivot, not an incremental subsidy.
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And it lands at a moment when India’s EV, semiconductor, industrial electronics, and defense ecosystems are accelerating and searching for domestic strength.
A Supply Chain Weak Link India Finally Confronts
The Economic Times report (opens in a new tab) gets one big fact right: rare earth magnets are the upstream choke point for EV motors, wind turbines, robotics, drones, semiconductors, and advanced electronics. Without magnets, the downstream—chips, batteries, PCBs—cannot function.
REEx analysis confirms:
- India currently produces no meaningful volumes of sintered NdFeB magnets.
- Demand is on track to double by 2030, driven by EV two-wheelers (a booming market) and energy-transition technologies.
- A domestic REPM industry could sharply reduce dependence on China, which still controls 85–90% of global magnet output.
What’s new here is the scale and the explicit linkage to semiconductors—an industry India desperately wants to enter at higher value tiers. Experts quoted in the original article correctly highlight that semiconductors and magnets are co-dependent. Motors, power electronics, radar modules, and advanced packaging all demand ultra-precise magnet technologies.
Where the Story Overreaches—And What Investors Should Know
Some commentary drifts into expected optimism—for example, suggestions that this scheme alone will “de-risk” India from China. That is aspirational, not guaranteed. Rare earth magnet supply chains require:
- Proven oxide-to-metal reduction know-how
- High-purity alloying
- Precision sintering
- Tight IP control (Japan still holds much of it)
- Metallurgy talent that cannot be bought overnight
The scheme’s gestation period of two years is realistic but still aggressive. The risk that large incumbents capture most incentives—leaving micro, small medium enterprises (MSMEs) and startups behind—is also a fair caution raised by local executives.
Andhra Pradesh---high tech manufacturing activity
That said, the reported surge in new manufacturing in Andhra Pradesh—from OSAT packaging (ASIP/APACT) to multilayer PCBs (Syrma)—is consistent with REEx’s own tracking of India’s rising electronics corridor.
Why This Matters Globally
India’s move is strategically notable because it represents the first credible REPM industrial policy outside China, Japan, the U.S., and Europe. If executed well, it could:
- Create a fifth major magnet-manufacturing pole
- Pressure on global REE prices and supply expectations
- Offer allied nations a non-Chinese magnet source in Asia
- Speed India’s EV market dominance in two-wheelers and three-wheelers
The geopolitical subtext is clear: India wants to be an indispensable magnet-and-chip partner in a multipolar tech world.
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$870 million to build extraction and processing capability for 6,000 tonnes per annum of rare earth magnet seems excessive.
The magnets may have a value of around $60/kg which means the 6 thousand tonnes will deliver $360 million of “sales” . This means the capital invested is more than double the sales which is more than many investment oportunities. Perhaps this simply underscores the very high sunk costs needed to support rare earths.