India Plans Rs 3,5005,000 Crore Scheme To Boost Rare Earth Magnet Production

(MENAFN- KNN India) New Delhi, Jun 20 (KNN) The Indian government is in the final stages of approving a Rs 3,500–5,000 crore incentive scheme to develop a domestic rare-earth magnet industry.

The initiative, expected to be formally announced within fort­night, aims to incentivize local production of critical minerals and magnets-especially those based on neodymium-to reduce deepening reliance on Chinese imports.

Since April, China has sharply curtailed exports of rare-earth materials and magnets, triggering global shortages that threaten electric vehicle (EV) and high-tech manufacturing.

Automakers in India, along with counterparts in the US and Europe, have issued warnings of potential production cuts by July if supply gaps continue.

Under the scheme, the government plans to deploy reverse-auction incentives and production-linked subsidies to bridge the price disparity between domestic output and lower-cost Chinese imports.

It's also exploring tariff exemptions for machinery, regulatory tweaks under the Mines and Minerals (Development and Regulation) Act, and“price-gap” funding to level the playing field.

Domestic interest in rare-earth ventures is growing: at least five major Indian firms have expressed preliminary plans to enter the magnet-manufacturing space.

Meanwhile, state-owned Indian Rare Earths Ltd (IREL) has been asked to halt its long-standing export deal with Japan, to prioritize national supply needs.

India holds approximately 6.9 million tonnes of rare-earth reserves-ranking fifth globally-but lacks large-scale processing capacity. State-led mining and refining via IREL cater primarily to defence and atomic-energy sectors.

The current crisis has galvanized a shift: the government is accelerating its National Critical Mineral Mission and diplomatic efforts-even preparing to send delegations to Beijing-to secure lifesaving magnet imports in the short term.

The long-term goal is clear: establish India as a magnet manufacturing hub and break the Chinese stranglehold on critical minerals. But with supply pressing and industrial demand growing, balancing immediate needs with strategic ambition remains a formidable challenge.

(KNN Bureau)

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