The Next Big Industry Could Be Rare Earths - Here's Why

In November 2025, the Union Cabinet approved a ₹7,280 crore scheme to manufacture something most Indians have never heard of - sintered rare earth permanent magnets.

If you’re wondering how big this is: every EV motor, every wind turbine, every guided missile, and every MRI machine depends on these magnets. And right now, India imports 85-90% of them from a single country - China.

For decades, this dependency was the cost of doing business. But with China repeatedly using export controls as a geopolitical weapon and India’s own EV and defence ambitions accelerating - it cannot go on. The government is now moving, fast, to build an entirely new supply chain from the ground up.

What Are Rare Earths And Why Is It So Important?

Rare earth elements (REEs) are a group of 17 metals with names like neodymium, praseodymium, and dysprosium that are essential to modern technology. Despite the name, they are not actually rare in the Earth’s crust. What makes them difficult is the extraction and processing, which is technically complex, expensive, and environmentally challenging.

And they show up almost everywhere, from your Smartphones and Laptops to the night-vision goggles used in defence

India’s current annual demand for rare earths stands at roughly 4,000–5,000 tonnes. This is expected to double by 2030, driven primarily by the EV transition - battery electric vehicles are projected to rise from 4.1% of India’s passenger vehicle production in 2025 to 17.3% by 2031.

How has the government moved so far?

For the first time in India’s history, three structural changes have happened almost simultaneously, creating what could be a genuine inflection point for the sector.

1. From 1950 until March 2025, a single government entity - IREL (India) Limited held exclusive control over rare earth mining in India. Private companies were simply not allowed to explore or mine rare earth minerals, including monazite (the primary source of REEs in Indian coastal sands).

   
   

   In March 2025, through amendments to the MMDR Act, the government officially opened the sector to private players. This means private capital, technology, and competition can now flow into a sector that was locked away for over seven decades.

2. There is also serious capital that is allocated to this field now:

   
   

   •        ₹7,280 crore approved for the Rare Earth Permanent Magnet (REPM) Manufacturing Scheme -targeting 6,000 MTPA of integrated magnet manufacturing capacity.

   •        ₹34,300 crore allocated under the National Critical Mineral Mission (NCMM) over seven years -covering exploration, mining, processing, recycling, and overseas asset acquisition.

3. The Union Budget 2026–27 also announced Dedicated Rare Earth Corridors in four states - Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These corridors will house integrated facilities for mining, processing, research, and manufacturing.

   
   

   India has also signed bilateral mineral agreements with Australia, Argentina, Zambia, Mozambique, Peru, and Zimbabwe. We also participate in the US-led Minerals Security Partnership. KABIL (Khanij Bidesh India Limited), a joint venture of NALCO, HCL, and MECL, has already signed agreements for lithium exploration in Argentina.

Who Benefits? The Investment Landscape for you to watch

The rare earth value chain has three distinct segments. Each carries a different risk-reward profile and timeline.

Other companies worth watching: MOIL (manganese, exploring rare earth adjacencies), Indian Metals & Ferro Alloys (IMFA), Vedanta (mining diversification), CG Power (semiconductor & magnet-adjacent manufacturing), and Gujarat Mineral Development Corporation (GMDC).

A Slow Build, but a Clear Strategy

This is not a short-term trade. Building a rare earth supply chain is hard, slow, and expensive. The risks are real:

•        Long gestation: Mines take 5 to 7 years to become fully productive. Processing facilities require cutting-edge technology that India doesn’t yet have at scale.

•        Technology gap: India lacks downstream refining and separation infrastructure, especially for heavy rare earths. China has a 30-year head start in processing technology.

•        Environmental concerns: India’s REE deposits are concentrated in coastal sands (monazite). Beach mining involves strip mining to a depth of 30 metres, raising ecological and regulatory risks.

•        Price manipulation: China could flood the market with cheap rare earths to undercut new competitors.

But despite this, India has political will, dedicated capital, regulatory reform, and geopolitical urgency all converging at the same time. The MMDR Act changes, the REPM scheme, the NCMM, the Rare Earth Corridors, and international partnerships like KABIL and the Minerals Security Partnership are not mere announcements. They form a coordinated national strategy.

For investors with a longer time horizon, the rare earth magnets could be the next big industry. It is a structural shift that will play out over the next 5–10 years - one that is still in its earliest innings, with very few market participants paying close attention.

Important Disclosure: This article is intended for educational purposes only and does not constitute a recommendation to buy, sell, or hold any security or investment. The information provided represents the personal views of the author. All investments carry risk, and past performance is no guarantee of future results. It is strongly recommended that you seek the advice of a qualified investment professional before making any financial commitments.

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