(MENAFN) India is preparing to substantially expand its domestic rare-earth manufacturing incentive program, aiming to nearly triple its current allocation to around $788 million, according to reports citing government sources. The move, pending official approval, marks a major increase from the existing $290 million program and is designed to strengthen India’s access to critical materials for sectors such as electric vehicles, renewable energy, and defense.

The initiative comes amid rising global tensions in the rare-earth market, following China’s export restrictions on key rare-earth metals. These minerals, essential for defense, electronics, and EV batteries, have been a flashpoint in trade disputes involving the US, EU, and China.

China first imposed export controls on rare-earth elements for military applications in April, citing national security, and tightened these restrictions in October with stricter licensing rules and extraterritorial provisions affecting US-related exports in defense and semiconductor sectors.

Last week, during a meeting in South Korea between US President Donald Trump and Chinese President Xi Jinping, Beijing agreed to suspend its latest export controls for one year in exchange for reciprocal reductions in US tariffs and trade restrictions.

China currently dominates the rare-earth industry, producing over 90% of refined materials and 98% of magnets globally, according to industry analysts and the International Energy Agency.

Meanwhile, Indian media reports indicate that at least three domestic companies—Continental India, Hitachi, and Jay Ushin—have recently received licenses to import Chinese rare-earth magnets. The licenses include conditions preventing the materials from being exported to the US or used for defense purposes, reflecting cautious easing of trade between India and China.

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