Recently, Piyush Goyal, the Minister of Commerce and Industry and Promotion of Internal Trade, announced at a press conference in New Delhi the launch of a "domestic production incentive plan for rare earth magnets," with an investment of 750 billion rupees (approximately 63 billion yuan) over the next five years, aiming to achieve a 70% localization rate of rare earth permanent magnets by 2030. Although it will take several years for India to build its rare earth magnet supply chain, this move will help reduce India's dependence on importing rare earth magnets from China. Currently, negotiations are underway with multiple enterprises to establish long-term reserves of rare earth magnets.
Last week, Reuters reported that Indian Commerce Minister Piyush Goyal, during recent meetings with executives from the automotive and other industries, requested state-owned miner IREL to suspend its rare earth export agreements with Japan, particularly for neodymium, a key material for EV engine magnets, prioritizing domestic demand. This action aims to reduce reliance on China. IREL also hopes to develop India's capabilities in rare earth processing. According to a 2012 agreement, IREL supplied rare earths to Toyota Tsusho (8015.T)-affiliated Toyota Tsusho Rare Earth India, which processed and exported them to Japan for magnet manufacturing. Customs data shows that Toyota Tsusho shipped over 1,000 mt of rare earth materials to Japan, accounting for one-third of the 2,900 mt of rare earths mined by IREL.
Considering India's previous actions, it is clear that under the backdrop of China's rare earth controls, to meet domestic demand, India has been compelled to develop its own rare earth resources. However, according to industry insiders, achieving a breakthrough in India's rare earth magnetic material dilemma in the short term may be difficult.
India possesses the world's third-largest rare earth reserves, estimated at 6.9 million mt, mainly distributed across Andhra Pradesh, Tamil Nadu, and Odisha. However, India's contribution to global rare earth production is less than 1%, primarily due to significant gaps in rare earth mining and refining technologies compared to China, the US, and Japan, lacking advanced separation and refining technologies, making it hard for its processed products to meet the demands of high-end manufacturing within the country. Additionally, poor infrastructure also hinders the advancement of India's rare earth projects, with the most critical issue being a power shortage. Incomplete statistics show that the power deficit in Tamil Nadu reaches 6,000 MW, severely restricting local rare earth ore mining. Another manifestation is the lack of roads, although Andhra Pradesh boasts a relatively developed road network, some areas have poor road quality and many unpaved roads, with less than 15% suitable for rare earth ore trucks. Finally, what constrains India's rare earth development is the volatility of local policies and severe bureaucratic corruption.At the national level, there is a desire to accelerate the development of rare earth mines, but many industry insiders indicate that the implementation of these policies at the state level presents a completely different reality. Moreover, severe bureaucratic corruption has led to a wait-and-see attitude among investors and rare earth enterprises, as "no one wants to engage in uncertain ventures."
SMM analysts, synthesizing views from industry insiders, maintain a reserved stance on India's breakthrough in rare earth magnetic materials by 2025, while also committing to continued monitoring of the Indian market.
