India Plans Rs 1,345-Crore Scheme To Boost Rare-Earth-Magnet Production Amid China's Export Restrictions
By incentivising domestic production, the government aims to secure critical supply chains for its clean energy, e-mobility and other manufacturing ambitions.
The Ministry of Heavy Industries has proposed a Rs 1,345-crore scheme to ramp up domestic production of rare earth magnets, crucial for electric vehicles, wind turbines, electronics and other applications, as China bars export of the elements amid growing geopolitical tensions.
The draft scheme is currently under inter-ministerial consultation and is expected to be put up for cabinet approval soon, Karan Rizvi, secretary at the ministry, said at a press conference in New Delhi on Friday in the presence of Heavy Industries Minister HD Kumaraswamy.
By incentivising domestic production, the government aims to secure critical supply chains for its clean energy, e-mobility and other manufacturing ambitions, and reduce the strategic risks posed by sudden supply disruptions or price shocks triggered by export restrictions.
The scheme is part of a broader push under the self-reliant India initiative to localise production of key components in high-tech industries and create a safe harbour to keep the manufacturing machinery running in India at a time when there is a supply-chain disruption due to China's export restrictions on rare earth elements.
The move comes as major economies, including India, look to reduce reliance on China and find ways to revive supply chains with indigenous capacity of critical minerals and rare earth elements. China currently dominates the global supply chain for rare earth elements, controlling around 60–70% of global rare earth production and over 85% of processing capacity.
In the past, China has used its rare earth dominance as a trade tool, tightening export controls on key minerals like gallium, germanium and graphite, citing national security concerns — moves widely seen as retaliation to western curbs on China's access to advanced chip technologies.
Rare earth magnets, such as neodymium-iron-boron magnets, are essential for high-performance motors used in electric vehicles and renewable energy technologies. India has some reserves of rare earth minerals but lacks large-scale processing and magnet-making capabilities, keeping it dependent on imports from China and a handful of other suppliers.
