India's Initiative for Rare Earth Magnets

Summary Notes on Rare Earth Permanent Magnet (REPM) Manufacturing in India

Government Scheme Details

• Scheme Approval: The Indian government approved a Rs 7,280 crore scheme to promote domestic manufacturing of Rare Earth Permanent Magnets (REPM).
• Capacity Target: Aims to establish an integrated manufacturing capacity of 6,000 metric tonnes per annum (MTPA).
• Beneficiaries: Five beneficiaries will be chosen through competitive bidding, each eligible for up to 1,200 MTPA.
• Incentives: Sales-linked incentives of Rs 6,450 crore over five years, plus a capital subsidy of Rs 750 crore for facility setup.

Importance of REPM

• Applications: Essential for technologies like electric vehicles, renewable energy systems, electronics, aerospace, and defense.
• Current Dependence: India currently meets almost all REPM needs through imports (over 53,000 tonnes in 2024-25, with 90% from China).
• Projected Growth: India’s consumption of REPM is expected to double by 2030 due to increased demand from renewable energy initiatives and electric vehicle adoption.

Global Context

• China's Dominance: Controls over 90% of the global supply chain for REPM, which it has used as leverage during trade tensions.
• India's Position: Lacks commercial-scale manufacturing capabilities, with only minor production from a few countries like Japan and Vietnam.

Manufacturing Process

• Composition: Primarily relies on neodymium, iron, and boron (NdFeB). The production involves mining, beneficiation, processing, and refining to rare earth oxides and magnet manufacturing.
• Stages Covered: The new scheme focuses on the last three stages: converting rare earth oxides to metal, metal to alloy, and alloy to magnet.

Challenges to Self-Reliance

• Raw Material Production: India struggles with domestic production of heavy rare earth oxides, essential for high-strength magnets. Mainly relies on imports for these materials.
• Competitiveness Issues: China’s cost advantage makes it difficult for Indian manufacturers to compete on pricing.

Legislative and Policy Framework

• National Critical Mineral Mission (NCMM): Launched for 2024-25 to 2030-31 with an outlay of Rs 16,300 crore to secure critical mineral supply chains.
• Amendments to MMDR Act (1957): Empowered the central government to auction critical and strategic minerals, resulting in 34 blocks auctioned since then.
• Joint Ventures: Formation of Khanij Bidesh India Limited (KABIL) for exploring foreign critical mineral assets, including signing an agreement in Argentina for lithium exploration.

International Initiatives

• Quad Initiative: Launch of efforts by the Quad (India, Australia, Japan, USA) to secure critical mineral supply chains.
• G7 Actions: Endorsement of the Critical Minerals Action Plan to reduce dependence on China for critical minerals.

Through this scheme and related initiatives, India aims to enhance self-reliance in REPM manufacturing and position itself as a significant player in the global market.