Rare Earth Magnets and India’s Green Industrial Gamble

Rare earths at the centre of the green transition

Rare Earth Magnets and India’s Green Industrial Gamble: Rare Earth Elements (REEs) have emerged as a strategic input in the global green transition. Though used in small quantities, they are indispensable for electric vehicle motors, wind turbines, and advanced electronics. By late 2025, the debate has shifted from availability to control over supply chains.

The real concern is not the abundance of minerals but the concentration of processing capacity. Countries increasingly view REEs through the lens of industrial security rather than raw material scarcity.

Static GK fact: Rare Earth Elements consist of 17 elements, including 15 lanthanides, scandium, and yttrium.

Why magnets are the real bottleneck

The most critical chokepoint lies in high-performance permanent magnets, especially neodymium-iron-boron (NdFeB) magnets. These magnets are essential for EV traction motors and direct-drive wind turbines due to their efficiency and compact size.

Supply disruptions in magnets transmit shocks across multiple industries simultaneously. Mining new deposits does little to address vulnerability if countries lack magnet-making capability.

Static GK Tip: NdFeB magnets were first developed in the 1980s and are the strongest commercially available permanent magnets.

China’s dominance and structural dependence

China dominates rare earth refining, separation, and magnet manufacturing. This dominance persists even as new mineral deposits are discovered elsewhere. Control over refining confers strategic leverage similar to oil refining in the energy sector.

Recent export controls have highlighted how midstream concentration can quickly disrupt global manufacturing. This has pushed countries to focus on processing and manufacturing rather than extraction alone.

India’s strategic pivot in late 2025

India’s late-2025 decision to prioritise magnet manufacturing marks a major policy shift. The ₹7,280-crore incentive scheme targets an annual capacity of 6,000 tonnes of sintered rare earth magnets. This approach aims to control the most sensitive node of the value chain.

Domestic magnet production can significantly reduce import dependence. It also supports downstream sectors such as EV manufacturing, wind turbine components, and electronics.

Static GK fact: India is among the world’s largest producers of monazite-bearing beach sand minerals.

The upstream constraint of monazite and governance

India’s rare earth reserves are largely found in monazite, which is associated with thorium, a strategic nuclear material. This places extraction under strict regulatory oversight involving multiple public sector agencies.

Environmental compliance and waste management are critical. Any governance failure risks public resistance and long-term project delays, making social legitimacy a core industrial requirement.

The missing midstream capacity

Under the National Critical Mineral Mission, the Geological Survey of India is expanding exploration efforts through 2031. However, exploration alone does not create industrial strength.

India lacks adequate separation, refining, and alloying infrastructure. This “missing middle” must be bridged through regulatory clarity, public investment, and strong environmental enforcement.

Making magnet manufacturing viable

For magnet plants to succeed, long-term demand assurance is essential. Offtake commitments from EV, wind, and electronics manufacturers can reduce investment risk.

Process innovation also matters. Recycling, material substitution, and efficiency improvements can reduce dependence on the most constrained elements and enhance resilience.

Static GK Tip: Rare earth recycling rates globally remain below 5%, indicating large untapped potential.

What the green transition will reward

The next phase of the green transition will favour countries that combine scale with environmental credibility. For India, success depends on execution, not announcements.

Magnets represent the immediate test. Building this capability with strong governance can secure India a durable role in the clean energy economy.

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Rare Earth Magnets and India’s Green Industrial Gamble: