Shares of Gujarat Mineral Development Corporation (GMDC) surged on Thursday after the Union Cabinet approved a landmark ₹7,280 crore incentive scheme aimed at boosting India’s domestic production of rare earth magnets. The initiative marks a significant step in the country’s efforts to reduce its reliance on China, expand strategic manufacturing capacity, and secure a place in the global clean-tech supply chain.
GMDC’s stock rose 8.4% to ₹569.80, extending its winning streak for a third consecutive session. The rally underscored heightened investor optimism as India positions itself to become a competitive player in the rare earth magnet industry – a sector crucial for electric vehicles, wind turbines, electronics, defense equipment, and advanced manufacturing.
India Moves to Secure a Critical Supply Chain
The Cabinet’s approval of the rare earth magnet program signals a major strategic intervention. Rare earth magnets, especially neodymium-iron-boron (NdFeB) magnets, are essential components in high-performance motors and industrial applications. Yet global production and processing are heavily concentrated in China, which controls nearly 90% of magnet processing capacity worldwide.
In recent months, the geopolitical risks around this dependence have intensified. China’s April decision to tighten exports of certain magnet-making technologies as part of its ongoing trade tensions with the United States sent ripples across global automotive and electronics industries. The move reduced supply visibility for manufacturers worldwide and sharpened India’s focus on building a domestic supply chain.
India’s new program aims to directly address this vulnerability. The initiative targets the creation of 6,000 metric tons of annual magnet production capacity, backed by incentives designed to make domestic manufacturing competitive at global scale.
Technology Minister Ashwini Vaishnaw, announcing the scheme in New Delhi, emphasized that India is well-positioned to build an integrated supply chain. “India has 6.9 million tonnes of rare earth deposits,” he said, highlighting the country’s status among the top three nations with placer deposits – naturally occurring mineral accumulations found along coastal regions.
A Seven-Year Plan to Build Domestic Magnet Manufacturing
The rare earth magnet incentive scheme will operate over seven years, during which the government plans to create a strong foundation for magnet production, processing, and potentially deeper integration into downstream applications such as motors and electrical components.
The program targets the establishment of five manufacturing units, each with an annual capacity of 1,200 metric tons, within three years. The facilities will be integrated, handling everything from processing to magnet fabrication — a capability currently dominated by China.
Union Heavy Industries and Steel Minister H.D. Kumaraswamy outlined the financial structure of the initiative. Each selected participant will receive:
- ₹750 crore in capital subsidy to support plant construction and equipment
- ₹6,450 crore in performance-linked incentives distributed over five years, tied to actual sales of domestically produced magnets
Both public and private sector companies will be eligible to apply, and interest has already emerged from sectors including electronics, automobiles, renewable energy, and steel.
Kumaraswamy noted that selection would take place through a transparent process, adding that companies will independently choose where to establish their manufacturing units. This flexibility is expected to encourage industrial clustering and allow magnet producers to align with existing supply chains for electronics and mobility manufacturing.
GMDC Rides the Momentum of a Strong Multi-Year Rally
GMDC’s sharp rise following the announcement is part of a broader and sustained rally for the state-run mining player. Since February, the company has delivered a 150% return, entering multibagger territory. The momentum has been strong enough to push the stock to an all-time high of ₹651 per share earlier this year.
Zooming out further, the company’s long-term performance paints an even more striking picture. GMDC shares have:
- Gained 300% over the last three years
- Risen 1,100% in the last five years, transforming from a low-value stock into a major performer in the mining and resource sector
GMDC is currently India’s second-largest lignite producer and the top merchant seller of lignite, supplying to high-growth industries such as chemicals, textiles, ceramics, bricks, and captive power units. As a State Public Undertaking of the Gujarat government, the company’s operational footprint spans key lignite-rich regions across the state.
Although GMDC is not directly involved in rare earth magnet manufacturing, investor sentiment appears driven by two factors: the broader sectoral momentum in industrial minerals and the potential downstream opportunities for state-backed mining companies involved in raw material extraction.
A Global Race for Rare Earth Independence
The Cabinet’s decision comes amid a flurry of activity worldwide as countries attempt to insulate themselves from supply disruptions in the rare earth magnet sector. Nations including Japan, the United States, Australia, and members of the European Union have all launched funding programs, joint ventures, or subsidies to lessen dependence on China.
Rare earth magnets are indispensable for several critical technologies, including:
- Electric vehicle motors
- Wind turbine generators
- Precision medical equipment
- Defense applications such as guidance systems
- Consumer electronics including smartphones and speakers
As global electric vehicle adoption accelerates and renewable energy deployment expands, demand for rare earth magnets is projected to grow rapidly over the next decade. This has heightened competition among countries for mineral access, processing capability, and technological know-how.
India’s new incentive program is therefore not just an economic initiative but a strategic one — positioning the nation as a future supplier and possibly a manufacturing hub for rare earth magnet components.
Building Capacity from the Ground Up
While India is rich in placer deposits, the country has historically lagged in the processing and value-add stages of the rare earth supply chain. Extraction is only the first step. Converting raw minerals into high-performance magnets requires highly specialized capabilities, including separation technologies, metallurgical expertise, sintering processes, and quality control systems.
The seven-year structure of the new initiative acknowledges this challenge. It gives companies time to build integrated facilities, develop technical expertise, and scale production in a globally competitive environment. The government’s financial incentives are also designed to offset the high upfront costs and long payback periods associated with advanced magnet manufacturing.
Industry experts say the program could significantly boost India’s strategic autonomy if implemented effectively. It may allow local industries – from automotive manufacturers to electronics companies – to procure magnets domestically, reducing exposure to external supply shocks.
