Aiming to cut reliance on China, India plans a major scale-up of its rare earth magnet production to boost clean energy and defence sectors.
India plans to nearly triple the size of its incentive programme for rare earth magnet manufacturing to more than $788 million as it seeks to strengthen domestic capacity in a sector long dominated by China, according to people familiar with the matter. The proposal, awaiting cabinet approval, marks a sharp increase from an earlier $290 million plan designed to secure critical materials vital for electric vehicles, renewable energy, and defence industries.
The move comes as part of India’s broader strategy to reduce dependence on China, which currently processes about 90% of the world’s rare earth output. The government aims to support around five companies through a combination of production-linked and capital subsidies, helping establish a local supply chain for high-performance magnets essential to clean energy technologies and advanced manufacturing.
India joins a growing list of nations working to diversify rare earth supply chains after China tightened export controls in April amid its trade tensions with the United States. Prime Minister Narendra Modi has previously cautioned against the “weaponisation” of critical minerals and called for secure, diversified global supply networks.
However, challenges persist. India’s limited funding, technical expertise, and long project gestation periods may slow progress. With domestic production still commercially unviable without subsidies, state-owned enterprises are leading early efforts to secure overseas mining partnerships, while the know-how for efficient processing and magnet manufacturing remains heavily concentrated in China.
