What will happen to my RE shares if I do not apply for rights issue?

The RE shares will get lapsed if you do not apply for the rights issue and your Demat account credited with these temporary shares will get debited once the allocation process is complete.

If the RE has been purchased, you will also lose the amount paid to acquire those REs. Thus REs in themselves do not mean you hold rights shares, the rights shares need to be applied for by the issue closing date.