India’s Permanent-Magnet Market Invisible in Statistics as Imports Dwarf ₹750-Crore Domestic Estimate, NCAER Economists Warn

The news

New Delhi. Three economists from the National Council of Applied Economic Research (NCAER) — Suvajit Banerjee, Sovini Mondal and Sanjib Pohit, of its research vertical on Computable General Equilibrium modelling, a method that simulates how a change in one sector ripples through the whole economy — argue in The Hindu that India’s critical minerals strategy lacks a framework to see where its dependence actually lies. At the heart of electric-vehicle motors, semiconductor fabrication facilities and precision machinery is the high-performance permanent magnet, a magnet that retains its magnetism without an electric current. Ferrite, Alnico and Samarium-Cobalt magnets continue to serve industrial uses, but Neodymium-Iron-Boron (NdFeB) magnets have become the backbone of the energy transition because no other commercially available magnet combines comparable strength with such a high power-to-weight ratio. India has begun strengthening its critical minerals and rare-earth strategy through the National Critical Mineral Mission, overseas mineral acquisitions, expanded geological exploration and PLI schemes. China’s tight export controls on rare-earth magnets and materials in April 2025, the authors write, exposed not only vulnerabilities in global value chains but also the limits of India’s understanding. Their central evidence: India’s Annual Survey of Industries estimates the domestic permanent magnet market at around ₹750 crore, yet international trade statistics indicate import values several times larger than that entire reported market. The gap may reflect differences in statistical coverage, industrial classification or supply-chain accounting, but policymakers cannot confidently explain where these magnets enter the economy or how they move through it. A magnet passes through a long journey — exploration, mining, mineral processing, chemical separation into oxides, refining into metals, alloying, engineering into magnetic materials and finally manufacture into finished magnets — and each stage demands different knowledge and capability. The authors propose an Integrated Techno-Economic Mapping (ITEM) framework that combines engineering and economic measurement to show where capability should be built, where partnerships are essential and where domestic investment would yield the highest strategic return. The stakes are global: The Indian Express reports that flows of Chinese rare-earth magnets, which US officials call insufficient, are on the agenda of US-China talks that began in New York on September 20. The syllabus link is critical minerals, industrial policy and the capital and technology behind manufacturing.

Static syllabus linkage

1. Rare earths are seventeen elements, and the problem is processing, not presence. Rare earth elements comprise the fifteen lanthanides plus scandium and yttrium. They are not especially rare in the Earth’s crust but are seldom found in concentrated, economically extractable deposits, and separating them from one another is chemically difficult and polluting. In India the main source is monazite in coastal beach sands, which also contains thorium; for this reason monazite is treated as an atomic mineral and its processing is handled by IREL (India) Limited, a public sector undertaking under the Department of Atomic Energy.
2. The National Critical Mineral Mission sets the policy frame. The Union Cabinet approved the National Critical Mineral Mission in January 2025, with an expenditure of ₹16,300 crore and expected investment of ₹18,000 crore by public sector undertakings, over the period up to 2030-31. It covers exploration, mining, processing, recycling and the acquisition of mineral assets abroad. Khanij Bidesh India Limited (KABIL), a joint venture of NALCO, Hindustan Copper and Mineral Exploration and Consultancy Limited, is the vehicle for overseas acquisitions, and in November 2025 the Cabinet approved a ₹7,280 crore scheme to promote the manufacture of sintered rare-earth permanent magnets.
3. The MMDR Amendment of 2023 gave the Centre power over critical minerals. The Mines and Minerals (Development and Regulation) Amendment Act, 2023 inserted Part D in the First Schedule, listing 24 critical and strategic minerals, including rare earths, for which the Central Government alone auctions mineral concessions. It also removed six minerals, including lithium, from the list of atomic minerals, so that private companies could explore them. In 2023 the Ministry of Mines identified 30 critical minerals for India.
4. The Annual Survey of Industries measures registered factories, not supply chains. The Annual Survey of Industries is conducted by the National Statistics Office under the Ministry of Statistics and Programme Implementation. It covers factories registered under the Factories Act, 1948 and provides data on output, inputs, employment and value added. Because it classifies units by their principal product and does not trace components across stages, a product like a magnet that is often imported inside motors or sub-assemblies can be under-counted.

Why UPSC loves this

1. Critical minerals are now a standard GS3 and GS2 topic. The syllabus covers the “distribution of key natural resources across the world” in GS1, “infrastructure: energy” and industrial policy in GS3, and bilateral and global groupings in GS2. Critical minerals connect all three, and the examiner has increasingly asked about supply chains for the energy transition.
2. Prelims tests rare-earth basics and the institutions. Which elements are rare earths, what monazite contains, which body processes it and what the 2023 amendment to the MMDR Act did are the kinds of statements that appear in Prelims.
3. Data quality is an emerging governance theme. The debate over India’s statistical system — survey coverage, base years and classification — has become a Mains theme in its own right. This story shows why statistics are not merely academic: without them, industrial policy aims in the dark.

Analysis

1. A policy cannot target a bottleneck it cannot see. If the Annual Survey of Industries puts the domestic magnet market at about ₹750 crore while imports are several times larger, the official picture misses most of the market. Magnets imported inside motors, compressors or electronic sub-assemblies are recorded under those products, so India’s dependence on Chinese magnets is likely underestimated. Any incentive scheme calibrated on that baseline will under-size capacity and misjudge demand. Measurement is thus not a technical preliminary to policy but the condition for its success.
2. Owning the ore is not the same as owning the chain. The authors’ point that a country may secure mineral resources and remain dependent is supported by the structure of the industry: the hard stages are separation, metal-making and alloying, where China has decades of learning and scale. India’s mission gives heavy weight to exploration and overseas acquisition, which is necessary but addresses the least scarce part of the chain. The counter-view is that without assured feedstock no processing plant is bankable; both have to be built together, which is exactly why a stage-by-stage map is needed to sequence them.
3. Relief from China can kill diversification. When China restricted rare-earth exports to Japan in 2010, Japan responded by financing alternative suppliers such as Lynas in Australia and reducing its dependence. But in many other countries, diversification efforts faded when Chinese supplies resumed and prices fell, because domestic plants could not compete. The US-China talks on magnet flows raise that risk for India: if supplies ease, private investment in Indian magnet plants will look less attractive. Long-term purchase commitments or price support from public buyers may be needed to keep capacity alive through periods of cheap imports.
4. Another framework risks becoming another report. The proposal for an Integrated Techno-Economic Mapping framework is sound, but India does not lack mapping exercises as much as it lacks institutions that combine customs, industrial, mining and technology data and are accountable for acting on them. The framework needs a clear home — for instance a shared platform among the Ministry of Mines, MoSPI, DPIIT and MeitY — and legal authority to collect firm-level data. Without that, it will produce a map that no one uses.
5. Magnets are a test of whether India can move beyond assembly. The same pattern seen in electronics applies here: India assembles EV motors and electronics using imported magnets, just as it assembles phones using imported components. Building magnet capability requires capital, technology and trained labour at each stage, not only a subsidy at the final one. This is where the four factors of production meet: land for processing plants with environmental safeguards, skilled labour in metallurgy, patient capital, and entrepreneurs willing to compete with established Chinese suppliers.

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