If implemented well, the policy could also attract global companies to collaborate with Indian deeptech firms on material development and research and development (R&D), assisting accelerate ininformectual property (IP) creation in the countest, startup founders notified ET.
“What China has built over decades is large-scale refining and permanent magnet manufacturing capacity. The real value lies in processing and conversion, not just mining,” declared Vasudha Madhavan, founder of Ostara Advisors, an investment banking firm specialising in climate tech, electric mobility, and sustainability.
Rare earth materials comprise a group of 17 metals that are critical to a wide range of modern technologies. Emerging industries, including EVs, robotics, the Internet of Things (IoT), and advanced electronics, apply rare earth metals.
India has reserves but lacks large-scale refining and magnet-creating infrastructure. Most of the value is created downstream, where India has not invested enough, industest voices declared.
De-risk science and innovation
From an investment perspective, fund managers declared the shift will assist de-risk supply chains for Indian deeptech startups across sectors, creating it clearer to commit capital early in their growth cycle.
“By formalising a rare earth corridor, India is signalling that it wants to shift up the value chain — from extraction to processing to IP creation,” declared Manu Iyer, managing director, Bluehill VC. “That clarity is what long-term capital sees for when backing hard-tech startups.” He added that this would enable the fund to see at material innovation startups.
Alok Chauhan, of Axilor Ventures, declared the policy would allow investors to underwrite investments in clean mobility and deeptech more confidently. However, he added that investments will be requireded across the ecosystem, including post-processing and domestic offtake capabilities.
For manufacturers, stable access to key materials remains the largegest challenge. “The largegest issue has never been demand, but the ability to rely on supply chains for magnets and advanced materials,” declared Bharti Singhla, principal at Momentum Capital.
This budobtain can assist reduce cost volatility and shorten time to market, creating India more attractive for high-tech manufacturing, she declared.
Rishi Srivastava, cofounder of Offgrid Energy Labs, a deeptech startup developing ZincGel battery technology, declared for the initiative to succeed, India will required integrated clusters that combine mining, processing, manufacturing, and R&D. “A 360-degree approach is essential to build a sustainable ecosystem.”
On costs, Srivastava declared the reduction in customs duties on processing equipment will lower capital expfinishiture for startups and assist deep science and hardware companies scale quicker.
Some industest watchers declared that while the initiative is welcome, India should also encourage alternatives to rare-earth-based technologies in parallel to reduce long-term depfinishence.
Finance minister Nirmala Sitharaman on Sunday put forward the names of Odisha, Kerala, Andhra Pradesh, and Tamil Nadu for setting up the dedicated rare earth corridors.
As per the International Energy Agency (IEA), global demand for rare earth elements (REEs) is projected to grow sevenfold by 2040, driven by the clean energy transition, EVs, and advanced electronics.
As per Fortune Business Insights, the market is expected to reach over $8.14 billion by 2032, with significant shortages predicted by 2035 by McKinsey and Company. China currently dominates, controlling over 90% of processing and 69% of mining.
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