India is preparing a major expansion of its rare earth magnet manufacturing programme, according to a Bloomberg report.
The government is considering nearly tripling the incentive package to over INR 70 billion (almost $788 million) — a substantial three-fold jump from the earlier $290 million plan, that focused primarily on securing critical minerals for electric vehicles, renewable energy, and defence applications.
A Push to Cut China Dependence
The proposed expansion marks India’s strongest effort yet to build a self-reliant rare earth ecosystem, a sector currently dominated by China, which processes almost 90% of the world’s rare earth output. The move comes amid global efforts by countries including the U.S., Japan, and members of the European Union to diversify their supply chains after China tightened export controls earlier this year.
As per Bloomberg’s official report, the PM Modi led government plans to extend financial support to around five companies through a mix of production-linked incentives (PLI) and capital subsidies. The goal is to attract both domestic and foreign investors to establish manufacturing and processing facilities within India.
While state-owned enterprises are exploring partnerships with overseas miners to secure access to key raw materials, the country continues to lag in refining and processing capabilities — areas where China remains unmatched. Interestingly, Beijing has recently approved the first licences for importing rare earth magnets into India, but none have been granted to Indian-origin companies yet. Officials at India’s Ministry of Heavy Industries have so far declined to comment on the development.
Strategic Minerals and Environmental Challenges
China’s continued dominance in key magnet materials such as neodymium, praseodymium, dysprosium, and terbium underscores the urgency for India to scale up. These minerals are essential for making magnets used in electric vehicles, wind turbines, electronics, and defence systems. However, mining them presents environmental challenges since they often occur alongside radioactive elements.
India’s strategy involves not only expanding production but also investing in advanced technologies that could help reduce dependence on these minerals altogether. The government is funding research on synchronous reluctance motors, which could potentially replace rare earth magnets in electric vehicles in the future.
Attracting Global Investors
Global suppliers have already expressed interest in supplying rare earth materials to India, whose annual demand stands at roughly 2000 tonnes of oxides (20,00,000 kgs)— a quantity easily met by global producers. Officials expect to lure major international magnet manufacturers to establish joint ventures or subsidiaries in India, strengthening domestic value chains.
However, analysts warn that India’s push could face headwinds if China eases export restrictions for other markets, including India, making Chinese magnets cheaper and reducing the incentive for investors to produce locally.
Despite these uncertainties, experts agree that India’s move marks a critical step toward energy security and technological independence. With global demand for rare earth magnets projected to surge in the coming decade, consistent policy support, international collaboration, and technology transfer will be crucial to positioning India as a meaningful player in the global rare earth supply chain.
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