India Rolls Out Masterplan To Cut Reliance On China For Rare-Earths: All You Need To Know

(MENAFN- Live Mint) India has initiated a step towards boosting local production of rare-earth magnets, aiming to significantly reduce its dependence on China for these vital electric-vehicle materials.

The Indian government is planning an incentive program worth as much as 25 billion rupees ($290 million), which is drawing interest from a clutch of large private companies who manufacture these magnets.

The policy blueprint is expected to be submitted for cabinet approval soon, although the final outlay may be subject to change, reported Bloomberg.

Prominent players show interest

Billionaire Anil Agarwal's Vedanta Group, Sajjan Jindal-led JSW Group and EV parts maker Sona BLW Precision Forgings Ltd. are among those who have expressed interest in this initiative.

India aims to support three to four large companies in the production of about 4,000 tons of rare earth magnets using locally-mined raw materials over a period of seven years.

Securing supply chains amid geopolitical tensions

India is making these efforts after China, which controls about 90% of the world's rare earths processing, tightened export controls on rare earths amid a trade war with the US, leading to a disruption of supply chains for global automobile makers, including those operating in India.

Also Read | China is still choking exports of rare earths despite pact with US

Prime Minister Narendra Modi mentioned the importance of securing critical minerals at the BRICS gathering in Rio de Janeiro, stating“It's important to ensure that no country uses these resources for its own selfish gain or as a weapon against others.”

The layout of the program

The plan includes a two-year gestation period, with incentives rolled out over five years post the manufacturing commencement, Bloomberg reported

India, with a rapidly growing electric vehicle industry , is considering an investment of up to 6 billion rupees for every 1,000 tons of capacity.

Under the proposed blueprint, companies will bid for annual production capacities ranging between 500 tons and 1,500 tons, the news agency reported.

Also Read | India's rare earths riddle: No quick fix as China holds the magnetic key

To qualify, manufacturers must meet strict norms, including the requirement that half of the value of the final product must come from locally produced neodymium-praseodymium oxide, an ingredient crucial for making high-performance magnets.

The domestic sourcing requirement will rise to 80% by the fifth year of manufacturing, the news report added.

Is this ambitious plan attainable ?

Even though the government is giving a big push to locally produced rare-earths , its budget is minimal and the timeframe remains ambitious as mines and processing facilities can take years to build. Another constraint is that the know-how stays heavily concentrated in China.

Despite their name, rare earths are actually not geologically rare. However, mining them economically is difficult, and can be bad for the environment due to their association with radioactive elements.

Also Read | Research in rare earths mining to get grants

While India has long sought to boost rare-earth production either domestically or through overseas projects, those efforts remain nascent.

This is because producing magnets in India without subsidies is almost impossible. The necessary oxide is supplied by state-owned Indian Rare Earths Ltd., and a project's return on investment in this sector is negative as there is no capital or operating subsidies, the news agency reported.

MENAFN09072025007365015876ID1109781183