PMO to hold high-level meeting today on rare-earth magnet crisis
What's the story
The Prime Minister's Office (PMO) is gearing up for a high-level meeting on July 18 to discuss the ongoing crisis over rare earth magnets, according to CNBC-TV18. The situation has raised major concerns across sectors, especially among auto and electronics manufacturers. The meeting will see participation from key government departments such as the Department of Heavy Industries (DHI), the Ministry of Commerce, and the Ministry of Mines.
Industry impact
Auto manufacturers warn government about production line disruptions
Auto manufacturers have already warned the government that a shortage of rare earth magnets could severely disrupt their production lines. These magnets are vital for several industries, including automotive, electronics, and renewable energy. The meeting is expected to focus on devising an alternative supply chain strategy to prevent future disruptions and review a ₹1,345 crore incentive scheme for rare earth magnets currently under inter-ministerial consultation.
Export concerns
Electronics industry raises alarms
The electronics industry has raised alarms over what it calls "informal sanctions" by China on rare earth materials, critical capital equipment, and the deployment of Chinese workers. Industry bodies warn these actions are jeopardizing India's $32 billion export-linked smartphone manufacturing ambitions for FY26. Stakeholders have urged the government to act swiftly to ensure supply chain continuity, facilitate technology transfers, and protect India's competitiveness in the global value chain (GVC).
Market response
GMDC shares surge ahead of stakeholder meeting
Ahead of the key stakeholder meeting on the rare-earth magnet crisis, shares of PSU mining major Gujarat Mineral Development Corporation (GMDC) have surged by over 10%. The company has expressed interest in venturing into critical minerals, including rare earths. It considers these materials as a 'value driver' due to their use in making permanent magnets for electric vehicle (EV) supply chains.
Strategic investment
Centre considering relaxing localization norms
GMDC has announced an investment of around ₹3,000-4,000 crore for critical mineral projects. The electronics industry has also written to the government about China's 'informal sanctions' on rare earth supplies and equipment. These actions could pose a major risk to India's export-linked smartphone manufacturing. In response to these concerns, the Centre is considering relaxing localization norms and allowing imports of fully-built motors.