Rare earth routes & an alternative path

The US-China trade truce buys India critical time to build its stockpile of rare earth magnets, as it puts in motion a plan to raise domestic production and diversify its pool of imports. Several tranches of licences have been issued for mining rare earth elements. Fiscal incentives are being offered to scale up production of rare earth magnets. An emergency fund has also been earmarked to tide over short-term import disruptions. India is pursuing bilateral and multilateral efforts, too, to reduce dependence on China. Normalising economic relations with China is vital to executing a fallback plan for rare earth elements. The cumulative impact of policy interventions is substantial for India's medium-term export and sustainability strategies, given the oversized impact of rare earth magnets in sectors such as consumer electronics and EVs.

Alternatives to rare earth elements in production of magnets open up further risk-mitigation strategies for countries with little import-substitution capacity. Research is throwing up interesting options for making permanent magnets free of rare earth elements. These are not as powerful, and efforts are on to identify magnetic materials that can pack as much punch while also rethinking motor design to incorporate the extra complexity. Another approach involves eliminating heavy rare earth elements from magnets so that loss of potency is contained with consequent lesser requirement for redesign of motors. Finally, permanent magnets can be replaced with electromagnets, providing a radically different pathway for the evolution of EVs. This last option is desirable from a sustainability perspective because it avoids the environmental degradation involved in mining and processing rare earth elements.

With the likelihood of severe disruption in supplies of rare earth elements receding, India should position itself at the forefront of the resilience campaign. It is key to the country's ambitions of emerging as a global manufacturing base, while remaining true to its climate commitments.