India is planning to expand its rare earth magnet incentive program to more than 70 billion rupees ($788 million), nearly three times its original $290 million allocation, Bloomberg reports. The proposal, currently awaiting cabinet approval, reflects a strategic push to develop domestic capacity in a sector heavily dominated by China. The final allocation remains subject to change, sources familiar with the matter told Bloomberg.
The move comes as China, which accounts for roughly 90% of the global processing of rare earth magnets, tightened export controls earlier this year amid a trade dispute with the United States, creating supply disruptions for automakers and technology firms worldwide. Prime Minister Narendra Modi has repeatedly emphasized that critical minerals should not be weaponized and has called for stable, diversified global supply chains.
India’s expansion plan aims to support five companies through a combination of production-linked incentives and capital subsidies. State-owned firms are leading the initial efforts, including securing overseas mining partnerships, as domestic production remains nonviable without government backing. Bloomberg notes that technological expertise and efficient mining practices remain heavily concentrated in China, posing additional challenges for India’s ambitions.
The government is also funding research into synchronous reluctance motors, a technology that could reduce reliance on rare earth materials over time. Several overseas suppliers have reportedly expressed interest in providing India with rare earth oxides, whose projected annual demand is around 2,000 tons — easily met by global producers.
By drawing global magnet manufacturers to establish local subsidiaries or joint ventures, India hopes to cut its dependence on Chinese imports, which have long been supported by opaque subsidies and aggressive pricing strategies. However, Bloomberg points out that if China extends its recent easing of export curbs to India, the price advantage of Chinese magnets could undercut long-term investment in India’s nascent domestic industry.
The expansion of India’s rare earth magnet program signals a broader global trend, as nations seek to secure critical materials for electric vehicles, renewable energy, and defense applications amid geopolitical tensions and supply chain vulnerabilities.
