'Go slow on magnet makers'

Japan's Proterial is evaluating a manufacturing plant in India, but is concerned about crowding the market

- Ayaan Kartik

Sean Stack, global CEO of Proterial, formerly known as Hitachi Metals.

Japanese rare-earth magnet giant Proterial Ltd says that New Delhi should be selective in backing large players to kick-start domestic rare-earth magnet manufacturing, as excessive production and initial high competition can make economic returns on the business unviable for companies.

Proterial is evaluating whether it can set up a rare-earth magnet plant in India, where it already has customers for its magnets, a top executive told Mint. “We're looking at how big the market is first and foremost. And [we are] also looking at it in the context of the government looking to get the right players,” Proterial’s global chief executive officer (CEO) Sean Stack said in an interview.

“We want to make sure that they're not overdoing it at the start, because if there's too much production at the start, it may be a market that never really takes off, because there's going to be so much competitive tension that it may not generate the right economic return,” Stack said.

The comments from the Bain Capital-backed Japanese firm come at a time when the government is finalizing the application process for its marquee ₹7,280 crore rare-earth magnet scheme, which will incentivize domestic production of rare-earth magnets.