Autobayng News Team
India’s long-awaited move to boost domestic rare earth processing has the potential to reshape manufacturing supply chains, sharply reduce reliance on China, and strengthen the country’s auto, EV and aerospace sectors, says Mayuresh Joshi, Head of Equity, Marketsmith India, talking to ET Now.India holds large reserves of rare earth elements, yet processes less than 1% of global output, forcing critical industries to depend heavily on Chinese supplies. The government’s latest approval aims to change that.
A structural shift, not a short-term fix
Joshi calls the decision “a very positive move”, noting that India must first unlock its domestic mining potential, attract capital, and build processing capabilities that have historically been concentrated in China.He says reducing dependence on Chinese exports is crucial, especially after Beijing’s earlier export restrictions created shortages across global supply chains.
“Once capital outlay is fixed, companies will start looking at rare earth processing aggressively. With timelines in place, technical capabilities will evolve, and the value chain will take shape,” Joshi notes.
Tech expertise will be built gradually
While Indian firms understand the mining and material assessment process, some technical know-how may need to be imported. Joshi believes this is feasible once investments start flowing and the ecosystem matures.
Auto, EV & aerospace to benefit the most
Recent supply bottlenecks hit automakers like Bajaj Auto and TVS Motor, who struggled when China curbed exports. The new scheme won’t resolve issues immediately, but Joshi sees major long-term gains:
- Auto and auto-component makers
- Electric vehicle manufacturers
- Aerospace industry
“This is not a quick-fix. But over the next few years, as domestic processing capacity ramps up, our overdependence on Chinese rare earths will reduce substantially.”
A multi-year transformation
The rollout will be gradual, involving:
- Detailed project planning
- Capital-intensive plant setup
- Absorption of global processing IP
- Timelines for domestic capacity expansion
But once operational, India could significantly enhance its strategic position in global supply chains.Joshi concludes that the program will “offer a huge positive for the domestic ecosystem”, strengthening India’s competitiveness across advanced manufacturing sectors.
Join the community of 2M+ industry professionals.
Subscribe to Newsletter to get latest insights & analysis in your inbox.
All about ETAuto industry right on your smartphone!
- Download the ETAuto App and get the Realtime updates and Save your favourite articles.
