Rare-Earth Magnet Manufacturing in India: Permanent magnets made of rare earth elements, particularly neodymium and praseodymium, are lightweight, stong, and energy efficient. Such magnets are used in various technologies including electric vehicles, smartphones, wind turbines, defense systems, and many other technologies.
They are important in enabling clean energy and supporting technologies that improve and help reduce energy consumption. Currently, India imports most rare earth magnets, but that will change because of the government’s announcement of a ₹7,280 crore scheme.
This scheme will support manufacturing of rare earth magnets and complete dometic value chain. This sector will support many Startups and MSMEs and represents high demand, future oriented, and government supported sector.
Key Aspects of the ₹7,280 Crore Government Scheme
Under the new Scheme, the Federal Government will provide more support than ever towards the manufacturing of sintered rare earth permanent magnets.
This support includes ₹6450 crore as incentives for sales, and ₹750 as a subsidy for additional capital. It will support a maximum of five manufacturers.
The objectives s to create 6000 metric tonnes of production capacity per annum in the manufacture of magnets. This scheme will fully support process integration for rare earth oxides, metals, and alloys to complete magnets.
The scheme will be active for 7 years, with the first 2 years for setting the scheme up, and the five subsequent years for providing the production linked incentives.
This strategy looks to cut down the 90% reliance on magnet imports from Chinese markets while supporting other industries like electric mobility, renewable energy, electronics, robotics, drones, defense, etc. as well.
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Market Perspective: Sustained Growth is Coming
There is no question that the Indian magnet market is in the middle of a period of significant growth and expansion. It’s predicted to increase from 637 million USD to nearly 1 billion USD in the next 10 years.
This is primarily the result of growth in: electric vehicles, wind turbines, smart electronics, modernization of the defense, and increased automation.
Approx 50% of the market consists of NdFeB, with sintered magnets leading the market in both volume and value sold. The automotive industry is a significant player, accounting for 27% of total magnet demand.
This is significant growth in the market and will allow the entrance of many new players.
India’s Raw Material Edge
India has the largest reserves of monazite deposited all over the country, containing upwards of 7.2 million tonne of rare-earth oxides. This gives India the raw materials required to manufacture rare-earth magnets.
However, India’s ability to refine the raw materials and process them is lacking. The new scheme addresses this by facilitating and supporting both upstream and downstream processes, like the production of oxides, alloys, magnets and other components.
India has the opportunity to create the entire value chain.
Read More: Rare Earth Magnet Production Opportunities in India
Business Opportunities for Startups and MSMEs
The scheme creates many straightforward and good value business opportunities throughout the value chain.
Rare-Earth Magnet Manufacturing Plant
This is the primary magnet production opportunity. Startups receive government support in the form of incentives and subsidies when producing sintered magnets.
This manufacturing business requires very high investments, skilled labor, and sophisticated machinery. Demand is the highest from EV manufacturers, electronic devices manufacturers, and defense contractors.
Startups can enter the market with 200–300 MTPA capacity and expand from there.
Custom Magnet Machining and Assembly of Precision Components
Numerous industries use magnets of particular dimensions and geometrical configurations. Startups can perform cutting, finishing, machining, and magnetizing of raw magnets. This has lower investment requirements in comparison to a full manufacturing plant.
This is a positive additional entry point into the value chain with the prospect of obtaining recurring business.
Rare-Earth Magnet Recycling Facility
Scrap motors and electronics in the form of e-waste and obsolete electronic devices contain magnets which can be recycled and raw material costs reduced. This business adds to the green chain supply of the industry. This business requires specific demagnetization and recovery technologies.
Scrap dealers and e-waste centres/disposal facilities provide the necessary raw material. Startups can collaborate with these partners.
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Rare-Earth Oxide or Alloy Processing Unit
This is the lowest forging opportunity. Startups have the possibility to transform the ore into oxides and create the alloys necessary for the magnets. This requires some expertise in chemistry and metallurgy and a moderate to high level of investment.
The suppliers of these units can establish long-term contracts with magnet manufacturers.
Import-Export Input Support-PM Kisan Samriddhi Kendras
India recently brought in 176.95 LMT of fertilizers for the 2023-24 market year. Startups have the opportunity to either consolidate premium imported micronutrients or export quality inputs and distribute through PMKSKs (PM Kisan Samriddhi Kendras).
Example: Import micronutrients and pair with soil test recommendations.
Manufacturing of Components and Motors Based on Magnets
New businesses can produce motors used in EVs, drones, robots, and wind turbines due to their access to local magnet suppliers. Strong design capabilities are required for the task. The target market is very demanding on the global scale as well as the local one.
New businesses can produce motors, drones, and small wind turbines.
Entry Options for New Companies
New businesses can select different entry options based on their financial capability.
- Magnet Production Facility: High Investment, High Returns.
- Custom Machining: Medium Investment, Medium Returns.
- Recycling: Low to Medium Investment, Strong Returns.
- Oxide or Alloy Production: High Investment, High Returns.
- Motor Manufacturing: Medium Investment, High Returns.
Every option comes with a different combination of risk and potential rewards.
Read More: Rare Earth Magnets in India: Key to a Self-Sustaining Future in Green Energy
Learning from Other Prosperous MSME Sectors
Indian MSMEs have had success in the solar manufacturing industry, electronic manufacturing, and Auto Components and Defense Production due to government facilitation in these sectors and early investments.
Magnets, especially rare earth, is a sector in India with significant long-term potential. New businesses will need to focus on quality, planning, partnerships, and compliance.
Risks and Minimal Mitigation Methods
Startups must understand these certain risks.
- Global inflation adds to the complexity by increasing the needed margins, so having flexible pricing and diversification is important.
- Lack of supply chain infrastructure makes securing long-term supply agreements crucial.
- The complexity of the systems means that both the employees and the capital equipment need to be of quality.
- Lack of access to the market means that high quality B2B sales and industry relationships are needed.
- One of the most important of the regulatory compliance is waste and especially chemicals.
Read More: Rare Earth Magnet Production Opportunities in India: A Complete Guide for Entrepreneurs
Why Now is the Best Time to Start
The industry is import dependent while having plenty of support, growing demand, and abundant primary resources. There is a clear market gap. Changes to the global supply chain will also aid domestic production.
You will be able to acquire brand recognition, and valued market presence, not to mention lucrative partnerships.
How NPCS Helps Startups Succeed
Niir Project Consultancy Services (NPCS) is focused on assisting entrepreneurs entering an emerging industry for the first time. NPCS produces market surveys and techno-economic feasibility reports (DPRs).
These reports outline the production process, assess the market, and provide flow diagrams for product mix optimization, equipment selection, raw material planning, and financial analysis. NPCS helps the entrepreneur understands all aspects of operational sustainability.
This is especially important for new strategic areas like the production of rare-earth magnets within India.
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Conclusion
India’s wildlife will benefit greatly from the country’s new 7,280 crore magnet scheme. New entrepreneurs will benefit greatly from the scheme as it will provide new opportunities.
There is a high demand for various products in electric mobility, clean energy, electronics, and defense. Growth in demand for products can be attributed to the development of rare-earth magnets.
The right strategies, alliances, and partnerships with NPCS will enable entrepreneurs to provide the necessary structures for successful startups that will provide products and services to a sustainable enterprise for a better future.
The value chain can be entered now to meet the demand for products and services in the Indian Industrial market.
FAQS
What is the purpose of the 7,280 crore scheme focused on rare-earth magnets?
The purpose of the scheme is to develop the capacity to produce rare-earth magnets so that less is imported.
Who has the right to venture into a business that deals with rare-earth magnets in India?
This is a sector for beginners, small, and medium enterprises, engineering companies, companies in electric mobility, and companies in metallurgy.
Is it possible to make profit from manufacturing rare magnets?
There is a high demand for products and services offered in electric vehicles, electronics, defense, and renewable energy.
Is the sector a high risk in terms of investment?
A high risk is associated with the development of a manufacturing plant, which is a full cycle. However, smaller investments are needed to develop machining, recycling, and component manufacturing.
What type of assistance can NPCS offer to business people?
NPCS offers a variety of services that include assistance with machinery, market studies, financial planning, and overall guidance for the project.
