India's ambitious drive towards electric mobility and renewable energy is confronting a critical vulnerability: its complete dependence on imports for rare earth magnets, a vital component for manufacturing Electric Vehicle (EV) motors and other high-tech automotive parts. This reliance, predominantly on China, exposes the nation's strategic industries to significant supply chain risks.
The Crucial Role and Import Crisis
Rare earth magnets, specifically Neodymium Iron Boron (NdFeB or "Neo") magnets, are indispensable in modern industry. They are the powerhouse behind EV traction motors, sensors, braking systems, and infotainment speakers. Their superior magnetic strength-to-weight ratio and relatively lower cost make them the preferred choice over alternatives like Samarium Cobalt (Sm-Co) magnets.
However, India's supply chain for these materials is alarmingly concentrated. Currently, 100% of India's rare earth magnet demand is met through imports. In 2024, India imported approximately 2.3 kilo tons, with a staggering 65% sourced from China, followed by Japan (15%), with the remainder from Hong Kong and South Korea. This dependency was starkly highlighted in June 2025 when China imposed export restrictions on these magnets, causing production slowdowns for several Indian EV OEMs before a partial easing in August 2025.
Why Local Production Remains a Distant Goal
Despite holding substantial reserves estimated at 7 million tons, India faces multi-layered challenges in building a domestic rare earth magnet value chain.
Raw Material Hurdle: India's rare earth deposits are primarily monazite-based, which have a lower concentration of target elements compared to China's bastnäsite. Crucially, monazite contains thorium, making it mildly radioactive. This necessitates stringent radiological safeguards and complex hazardous waste management, escalating both cost and processing time.
Technology & Scale Gap: While some indigenous technological progress has been made, achieving commercial-scale production that matches Chinese competitors in cost, yield, and quality is unproven. Scaling from lab to factory requires exceptional process control. Furthermore, China's 2025 restrictions on exporting magnet manufacturing equipment have intensified the need for domestic R&D and partnerships with nations like Japan and the USA.
Policy Framework: Although IREL (Indian Rare Earths Ltd.) has begun engaging with private players, a comprehensive policy to incentivize magnet manufacturing, similar to the PLI scheme for batteries, is yet to be finalized. Clear roadmaps for fast-tracking approvals and ensuring raw material access are missing.
The Strategic Path Forward for India
Securing this critical supply chain demands a coordinated, multi-pronged national strategy.
Boost Technological Prowess: The government should consolidate fragmented R&D by establishing a dedicated national panel for rare earths. This body would align academic research with industrial needs, accelerate prototyping, and streamline the shift from development to commercial production. Strategic technology partnerships with countries leading in magnet manufacturing are essential.
Create a Commercialisation Roadmap: A targeted Production Linked Incentive (PLI) scheme for rare earth magnets, ensuring assured access to processed materials from IREL, is vital. Parallel efforts to expedite environmental clearances and provide infrastructure support will improve investment attractiveness for midstream and downstream manufacturing.
Embrace a Circular Economy: In tandem with primary production, India must build a robust recycling ecosystem for end-of-life magnets from motors and electronics. Efficient collection and recovery systems can create a secondary supply, reduce mining dependence, and position India as a future hub for sustainable magnet recycling.
With demand for these magnets projected to triple from ~2 kilotons in FY25 to ~6 kilotons by FY30, the clock is ticking. A unified push across technology, policy, and recycling is not just about mitigating the "China+1" risk; it's fundamental to achieving India's EV30@30 goal and establishing itself as a resilient, self-reliant manufacturing powerhouse.
