E-Paper
Strategic turn in materials sovereignty
Authored by - Yash Khandelwal, energy lead, Centre for Accelerating India’s Growth (CAIG), Nation First Policy Research and Change (NFPRC) Foundation.
Amid rising global uncertainty over critical resources, India has made a clear choice to not outsource its strategic decisions. For a long time, India has relied on rare earth permanent magnet (REPM) imports. Supplies from China, which dominates rare earth processing and magnet manufacturing, met 60 to 80 per cent of domestic demand between 2022 and 2025. This dependence has not been merely commercial. Supply restrictions in the past have been used as tools of “weaponised interdependence,” disrupting production in sectors such as the Indian automobile industry. Since then, the policy direction has shifted from dependence to capability. The approval of the country’s first sintered REPM unit reflects this shift.
The Union Government has approved an outlay of ₹ 700 crore to incentivise an end-to-end rare earth processing unit under the Production Linked Incentive (PLI) scheme of the ministry of electronics and information technology. At one level, this is an industrial milestone, marking India’s entry into a tightly held segment of the global supply chain. At another, it is a strategic test to see if Indian industry can move beyond exploration and participate in high value material transformation.
Sintered REPMs sit at the core of modern industry. They power electric vehicles, wind turbines, robotics, precision electronics, and advanced defence systems. Yet their production is not straightforward. The process involves a sequence of tightly controlled stages, from oxide separation and alloying to jet milling, magnetic alignment, compaction, sintering at high temperatures, and precision finishing. Each stage demands specialised equipment and process knowledge that has historically been concentrated in a handful of firms, predominantly in China and to a lesser extent, Japan and Vietnam. The barrier is not simply capital, it is cumulative know how. Replicating this ecosystem is not a linear task. It requires coordination across mining, processing, manufacturing, and end use industries.
Recent policy steps indicate that such coordination is being attempted by the Indian Government. In November 2025, the government launched a dedicated scheme to promote domestic manufacturing of REPM, with an outlay of ₹ 7,280 crore to build 6,000 tonnes of annual capacity by 2032. The Union Budget 2026–27 strengthened this initiative through the announcement of rare earth corridors across Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These corridors are intended to integrate mining, processing, research, and manufacturing into a unified ecosystem rather than a fragmented chain.
The newly approved unit in Uttar Pradesh, pioneered by Lohum Cleantech, takes this a step ahead by using an entirely indigenous processing technology to manufacture sintered REPM. Union minister Ashwini Vaishnaw has described the project as a breakthrough across the mineral-to-magnet value chain. In a sector marked by concentration, its indigenous intellectual property (IP) is a step towards technological sovereignty.
The timing is aligned with demand. Consumption of rare earth magnets in India is projected to reach around 8,000 tonnes by 2030. The facility will have a capacity of 2,000 tonnes to process both light and heavy rare earth elements and convert them into finished magnets. Rajat Verma, CEO of Lohum Cleantech, expects the unit to meet nearly one-fifth of domestic demand within three years of its operation. At its current scale, the facility represents an important pathway for subsequent investments across the value chain. However, the next phase will be decisive as the immediate constraint lies upstream.
While India has 8.52 million tonnes of rare earth resources, these had remained under the monopoly of IREL (India) Limited under the jurisdiction of the Atomic Energy Act 1962. Following the MMDR Amendment Act 2023, rare earth mining has seen a strategic opening for private sector extraction and processing. Recent steps, including the auction of rare earth mineral blocks under the sixth and seventh tranches of critical minerals, signal clear forward movement. However, to sustain this momentum, a few friction points require attention.
The cancellation of 11 blocks in the sixth tranche, following limited bidder interest, underscored the need to deepen investor confidence. A number of identified blocks remain at early stages of geological assessment, such as G3 and G4. These offer initial indications but require further exploration to establish commercial viability.
Moreover, while regulatory hurdles have been streamlined, judicial challenges are persistently looming for rare earth mining and processing. Rare earth mining is inherently complex because radioactive thorium and heavy metals are the byproduct of the process. Improper release of these contaminants in the environment has impacted human health, with documented cases ranging from the Yangtze river flood plains in China to Kerala in India. The historical precedent of the Kodaikanal mercury factory suggests that in the absence of centralised environmental management, even strategic projects granted an EIA clearance remain vulnerable to judicial intervention triggered by public safety concerns and protests.
To overcome the geological and environmental challenges to private participation, the mining sector must move beyond basic compliance by adopting state of the art Joint Ore Reserves Committee (JORC) reporting standards for mineral exploration. In tandem, operational standards must ensure that mining and processing units are concentrated and adhere to a strict radiation cap of 30 mSv in any single year for occupational workers, as prescribed by the Atomic Energy Regulatory Board (AERB). Strengthening geological confidence through such bankable resource estimates provides the scientific evidence required to defend projects before the judiciary, mitigating the risk of legal disruptions triggered by public safety concerns or protests.
Data systems must evolve in parallel to transition identified blocks from early stages to the more advanced G2 and G1 levels of geological certainty. Upgrading to advanced exploration technologies, including AI-based geological analysis and non-destructive exploration techniques, can improve the quality and standardisation of information within repositories such as the National Geoscience Data Repository. By integrating improved beneficiation and extraction processes into these data frameworks, India can ensure that its material transformation is supported by both environmental robustness and precise resource mapping.
Equally important is the emphasis on demand creation. Sectors such as electric mobility, renewable energy, defence manufacturing, and semiconductors must anchor long-term procurement. Stable offtake agreements can provide the certainty required for firms to invest in capacity and technology.
At the same time, continued support for research and development will be necessary to further build indigenous IP and reduce dependence on imported processes. Early stage operations may also face cost pressures relative to established global suppliers, making policy support and assured demand particularly important during the scale up phase.
International partnerships can complement domestic efforts. Engagements with resource rich countries such as Brazil and Canada offer opportunities to diversify supply while India builds its own extraction capabilities. At the same time, collaboration with technology leaders can accelerate learning curves in processing and manufacturing.
The establishment of India’s first sintered rare earth magnet unit reflects a clear shift in economic strategy. Aatmanirbhar Bharat chooses to build critical capabilities at home. It signals that a Viksit Bharat will be defined not by what it consumes, but by what it produces. The policy direction is clear. Execution will now determine the outcome.
This article is authored by Yash Khandelwal, energy lead, Centre for Accelerating India’s Growth (CAIG), Nation First Policy Research and Change (NFPRC) Foundation.
