₹7280 Crore Rare-Earth Drive: Investment Opportunity or Hype?

Rare earth magnets have become indispensable in the technological growth of any nation, and so has India. However, India has been highly dependent on China for its rare earth magnet imports, but not anymore. The Indian government has approved a ₹7280 crore scheme for the manufacturing of rare-earth permanent magnets domestically. 

India Rare Earth Magnets Scheme 2025

The India Rare Earth Magnets Scheme 2025 has been developed for creating an integrated value chain of these magnets. There will be 5 manufacturing facilities which will be set up each with an annual capacity of producing 1200 MT of these magnets, totalling 6000 MT per annum. 

Process of Rare Earth Magnet Manufacturing 

The process will include the sourcing of rate earth oxides and then converting them to metals. Then these metals will be converted to alloys, and finally, the alloys will be converted to rare-earth permanent magnets. 

These manufacturing units will be developed by the beneficiaries selected globally on the basis of a bidding process. Each of the beneficiaries will be offered the sale-linked and capital subsidy, and they will be individually responsible for producing 1200 MTPA of the rare earth magnets. 

Duration of the Scheme 

As decided until now, the whole scheme will run for a period of 7 years, which will include the first two years required for setting up all the manufacturing facilities and other units. 

Scheme Investment 

The total investment dedicated to this scheme is ₹7280 crore, which will be divided as ₹6450 crore for sales-linked incentives for the five years starting after the manufacturing starts. For setting up the facilities, ₹750 crore will be used as capital subsidy. 

Why is REPM manufacturing crucial in India?

Rare earth magnet manufacturing in India is crucial, as there are different industries that depend on these magnets for the technology they use. Whether it is the growing electric vehicle industry, the renewable energy sector, or defence mechanism, or the aerospace sector, everything depends highly on these rare earth permanent magnets. 

India has been highly dependent on China for its rare earth magnet supply, which has often hindered its growth, especially in the above-mentioned sectors. Thus, this rare earth permanent magnets policy is essential to build self-reliance and reduce dependency on China and other nations for the magnets. 

Why REPM Manufacturing is Important for Investors?

As anticipated by the experts, the demand for these rare-earth permanent magnets will double by 2030. This will be mainly due to rising environmental concerns and people shifting more towards sustainable living. With higher adoption of electric vehicles, renewable sources of energy, and for development of advanced electronics for defence, aerospace, and similar sectors, the demand for these rare earth magnets can surge drastically. 

However, it also needs to be kept in mind that this is a long-term process and India is far from becoming self-sufficient. It will at least take the next 4 to 5 years. Even then, there will be a lot of factors investors need to be aware of, which makes any decision related to these magnets. 

The global demand cycles, manufacturing costs, competition in the market, and shift in technologies will also decide the course. 

Wrapping up 

So, there is no two ways about rare earth magnets being crucial for the growth of technology and different sectors depending on such technologies. With this new rare earth magnet scheme, India can become self-reliant and produce its own rare earth magnets to boost its economic growth without depending on other countries. That’s not all, this policy can also act as a catalyst in achieving India’s Net Zero target by 2070. 

Source: MoneyControl

Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.