India Unveils ₹1,345 Crore Incentive Scheme to Boost Rare Earth Magnet Production Amid Global Shortages

The government proposes to support two select manufacturers as China curbs exports

Mumbai, 11 July 2025: India is moving forward with a ₹1,345 crore subsidy program to build a strong local industry for rare earth magnets. These magnets are important parts of electric vehicles (EVs), wind turbines, consumer electronics, and advanced defense systems. The plan involves full support, from turning rare earth oxides into high-performance magnets, and is now being reviewed by all the ministries. Final approvals are expected to come in 15 to 20 days.

H. D. Kumaraswamy, the Minister of Heavy Industries, said that the plan includes giving incentives to two lead manufacturers at first, but this number may grow as the policy details are worked out. Key companies, including Mahindra & Mahindra, Uno Minda, and Sona Comstar, have already said they want to build magnet production facilities. This shows that the industry is in line with the government’s plans. This project is part of a larger plan of ₹3,500–₹5,000 crore to strengthen India’s place in the global rare earth magnet supply chain and cut down on its reliance on China, which now makes around 90% of all magnets in the world.

The plan works with other initiatives to diversify sources, such as buying goods from Japan and Vietnam for a short time, while also increasing domestic mining through Indian Rare Earths Ltd.

Two manufacturers to receive incentive support

Kumaraswamy revealed that the scheme is designed to support two select manufacturers with targeted incentives to establish or expand processing capabilities within India. By launching this scheme, India is taking decisive steps toward strengthening its critical materials supply chain, aligning with global efforts to secure high-tech manufacturing and clean energy independence.

“We are interested in magnets. Anybody who gives us magnets will get an incentive,” said Kamran Rizvi, Secretary in the Ministry of Heavy Industries. He emphasized that this is the first formal outline circulated for inter-ministerial feedback, with the goal of strengthening the country’s critical materials supply chain.

Strategic importance of rare earth magnets

Rare earth magnets, especially neodymium-iron-boron (NdFeB) magnets, are crucial components used in electric vehicle traction motors, power steering motors, and other automotive applications. Their importance spans both electric and internal combustion engine vehicles.

With China currently imposing export curbs on these essential metals, multiple industries across the globe, including India’s automobile and semiconductor sectors, have felt the impact.

Role of Indian Rare Earths Ltd

The production ecosystem in India is centered around Indian Rare Earths Ltd, a public sector undertaking under the Department of Atomic Energy, which is the country’s sole repository of rare earth materials. The upcoming scheme aims to bridge the gap between the availability of raw materials and finished magnet products.

Strengthening India’s EV and electronics supply chain

This initiative is part of a broader push to enhance self-reliance in key technologies and reduce dependency on Chinese imports, especially for critical raw materials in the fast-growing electric vehicle and electronics sectors.

By facilitating investment in rare earth magnet production, the government hopes to secure supply chains, support domestic manufacturing, and position India as a reliable alternative in the global market for high-performance magnets.

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