India is looking to ramp up its push for rare earth magnet manufacturing, with plans to expand its incentive scheme to over $788 million, Bloomberg reported, citing people familiar with the matter.
It said that the move is part of New Delhi’s broader effort to build self-reliance in a field where China currently holds a near-monopoly.
The proposal, which still needs Cabinet approval, is a significant leap from an earlier plan of roughly $290 million meant to secure critical materials used in electric vehicles, renewable energy systems, and defense. The final amount could, however, be revised before approval, the report added.
The urgency comes as countries around the world scramble to reduce their dependence on Chinese supplies. Beijing processes nearly 90 per cent of global rare earth output and earlier this year tightened export controls, rattling industries from autos to electronics. Prime Minister Narendra Modi has since emphasised that critical minerals should not become tools of geopolitical leverage and called for more stable, diversified supply chains.
Still, India’s rare earth ambitions face familiar challenges — limited funding, long project cycles, and a lack of technical know-how. Extraction itself can be tricky and environmentally sensitive, as rare earth deposits are often linked with radioactive materials.
According to the report, the new incentive package is expected to support about five companies through a mix of capital and production-linked subsidies. While China has allowed imports of rare earth magnets for use in India, none of the licenses so far have gone to Indian-origin firms.
To reduce future dependence, the government is also backing studies into synchronous reluctance motors — a magnet-free technology that could offer an alternative to rare earth components.
India currently needs about 2,000 tonnes of rare earth oxides each year, a demand that global suppliers can easily meet. Policymakers hope that expanding incentives will encourage major magnet manufacturers to establish local units or joint ventures, cutting reliance on Chinese imports supported by opaque subsidies and aggressive pricing.
However, the plan’s success could hinge on China’s next move. If Beijing’s recent relaxation of export curbs for the US and Europe is extended to India, cheaper Chinese magnets could flood the market — potentially undercutting India’s long-term investment prospects in this strategic sector.
