New Delhi, July 28 Amid the exports ban by China on rare earth magnets, the active participation of state governments in India in encouraging rare earth exploration and processing can contribute to regional economic development and self sufficiency in critical mineral value chains, an SBI Research report said on Monday.
The imports of rare earth magnets averaged $249 million in last four years. In FY25, magnet imports were $291 million — highest in last four years.
“Our analysis indicates sectors impacted by ban are – Transport Equipment, Basic Metals, Machinery, Construction and Electrical and Electronics. Both domestic production and exports will be impacted,” said Dr Soumya Kanti Ghosh, Group Chief Economic Advisor, State Bank of India.
The government launched the National Critical Mineral Mission (NCMM) in 2025 to establish a robust framework for self-reliance in the critical mineral sector with total funds allocation of Rs 18,000 crore for the period 2025-31.
Domestic value-chain creation in critical minerals will require state government participation. Many states have issued Notice Inviting Tenders (NIT) for the auction of Exploration License (EL)
The Industrial Policy Resolution 2022 of Odisha government recognises Rare Earth Minerals based value-added products as a priority sector under the policy. Odisha Government has approved Rs 8,000 crore titanium facility in Ganjam to boost high-tech manufacturing.
Critical mineral value-chains can be source of regional economic development given the expanding digital and green economy.
Around 30 minerals have been identified as critical for India’s economic security by government.
“India will invest in exploring and acquiring critical mineral assets in resource-rich countries. PSUs and private firms will be supported through funding, guidelines, and inter-ministerial coordination. Accordingly, critical minerals are an important business opportunity for banks that requires exclusive policy focus and strategic direction within banks,” said the SBI report.
Rare earth being a critical mineral, disruption in supply of rare earth can impact the financial exposure of banks to these sectors as also ancillary ones.
“However, it should be kept in mind vulnerability is also a function of available inventory of rare earth and disruption is not immediate uniformly across sectors,” said the report.
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