India Plans ₹5,000 Cr Scheme to Boost Rare Earth Magnet Output

• India is launching a ₹3,500–₹5,000 crore scheme to boost rare earth mineral and magnet production.
• The move aims to cut reliance on China amid tightened export controls.
• A reverse auction model will allocate incentives, with strong industry interest.

India is launching a major program of ₹3,500 crore to ₹5,000 crore to increase the domestic production of rare earth minerals and magnets. A senior official said that they expects the proposal to gain final approval from the government in the next fortnight.

This plan follows China tightening export controls on rare earth materials back in April. These restrictions disrupted globally supply chains for rare earth materials and a lot of industries, such as automotive and technology industries, in the US, Europe and India.

Five prominent Indian companies have expressed interest in joining the scheme, and the scheme will operate using a reverse auction approach for the allocation of incentives to foster competitive pricing and production efficiency.

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The governments initiative follows a government review that highlighted the urgent need for India to look beyond its current sources of supply. Concerns over supply shortages have provoked domestic automakers to demand immediate action from the government.

India has approximately 6.9 million metric tonnes of rare earth reserves, ranking it fifth in reserves globally, but has no manufacturing capability for rare earth magnets. In FY25 India imported 53,748 metric tonnes of rare earth permanent magnets, composing primarily of magnets from China.

China manufactures nearly 90% of the world’s permanent rare earth magnets worldwide and uses its dominance within the context of political tensions with the US. China now restricts the export of finished magnet products, considering the elements required in the manufacturing process to be restricted (required to be imported).