Why is it in News?
- The Union Cabinet has approved a ₹7,280-crore scheme to promote domestic manufacturing of Rare Earth Permanent Magnets (REPMs).
- The scheme aims to set up integrated facilities that convert rare earth oxides → metals → alloys → finished magnets, reducing India’s overwhelming dependence on Chinese imports.
- This comes amid China’s continued control over global REE supply chains, periodic export restrictions, and rising global demand from EVs, wind energy, electronics, robotics, defence.
Relevance
GS-3: Economy & Infrastructure
- Critical minerals
- Strategic industries
- Import substitution
GS-3: Science & Technology
- Advanced materials
- Metallurgy
- Magnetic technologies
GS-2: International Relations
- Supply-chain resilience
- India–China trade dependencies
- Quad critical mineral collaboration
What are Rare Earth Elements (REEs)?
- A group of 17 elements including lanthanides + scandium + yttrium.
- Known for:
- High magnetic strength
- High melting point
- Excellent conductivity
- REPMs (e.g., Neodymium-Iron-Boron (NdFeB)) are critical to:
- EV motors
- Wind turbines
- Electronics
- Defence systems (missiles, radars)
- Robotics and drones
Why Does India Need REPM Manufacturing Now?
Massive Import Dependence
- India imports nearly all REPMs, especially from China, despite having 8% of global REE reserves.
- In 2024–25 India imported ~53,000 tonnes of REPMs, over 90% from China.
- Domestic REE output is <1% of global production.
Rising Domestic Demand
- Demand projected to rise sharply due to:
- Renewable energy expansion
- EV ecosystem growth
- Defence manufacturing
- Electronics PLI schemes
- Expected consumption to double by 2030.
Strategic Vulnerability
- China controls:
- 70% of REE production
- 90% of global processing and magnet manufacturing
- Has repeatedly restricted exports (2009, 2020, 2023, 2024), hurting global supply chains.
What Does the New ₹7,280-crore REPM Scheme Do?
Key Features
- Supports 6,000 MT annual REPM production capacity (MT/PA).
- Five beneficiaries to be chosen through competitive bidding.
- Will offer:
- Capex support up to ₹6,450 crore
- 75% subsidy for setting up integrated REPM facilities
- Focus on integrated operations, i.e., processing from oxides → metals → alloys → magnets within India.
Outcome Sought
- Reduce Chinese import dependence.
- Build domestic supply chains for EVs, defence, renewable energy.
- Upgrade India’s metallurgical and materials-science ecosystem.
India’s Current Position
Strengths
- Strong monazite reserves (Andhra Pradesh, Odisha, Tamil Nadu, Kerala).
- Indian Rare Earths Ltd (IREL) produces some oxides (Nd, Pr, Dy).
- Growing private sector interest in magnet recycling.
Weaknesses
- No large-scale REPM manufacturing capacity.
- Refining, metallisation and alloying infrastructure is minimal.
- High entry-barriers:
- Cost of plant
- Technical know-how
- Skilled manpower
- Tight global intellectual property ecosystem
- China’s aggressive pricing makes competition very difficult.
The China Factor
How China Built Dominance
- State-supported mining, refining, and manufacturing.
- Integrated supply chains linking mining → oxides → metals → alloys → magnets.
- Low-cost production + subsidies.
- Heavy rare-earth technologies tightly controlled.
China’s Leverage
- REEs used as a geopolitical tool—export controls imposed during trade tensions with:
- U.S.
- Japan
- Taiwan
- Europe
- Magnets are central to China’s grip on EVs, electronics, and defence manufacturing.
How India Plans to Bridge the Gap ?
Domestic Initiatives
- National Critical Mineral Mission (2024).
- Funding for exploration and mineral mapping.
- Mining block auctions (lithium, REEs).
- Magnet recycling initiatives (urban mining).
- Collaboration with Japan, Australia, U.S. on critical minerals.
Required Steps for Self-Reliance
- Build refining and metallisation capacity.
- Incentivise private players and joint ventures.
- Increase IREL capacity + technology partnerships.
- Create a full supply chain reducing foreign dependence.
Challenges Ahead
- High cost vs China’s subsidised pricing.
- Environmental concerns in mining/refining.
- Technological complexity in magnet production.
- Long gestation periods for mines (7–10 years).
- Need for advanced materials-science R&D and IP development.
