Highlights

• India plans a ₹1,350 crore incentive program to develop domestic rare earth magnet manufacturing capabilities.
• The seven-year scheme will subsidize 30-50% of production costs for critical magnet technologies used in EVs, defense, and electronics.
• Currently importing over 53,000 metric tons of magnets annually despite having 6.9 million metric tons of rare earth reserves.

India is preparing to unveil a ₹1,350 crore (~$160 million) incentive scheme aimed at building a domestic rare earth magnet supply chain, in a bold move to reduce dependence on Chinese imports. The proposed seven-year program would subsidize 30–50% of production costs, according to official sources cited in The Financial Express (opens in a new tab).

This marks one of India’s most significant industrial policy shifts in critical materials. Rare earth magnets—especially those containing neodymium, praseodymium, dysprosium, and terbium—are essential for electric vehicles, defense systems, wind turbines, and electronics.

Despite having 6.9 million metric tons of rare earth reserves, India mined only 2,900 tons in 2024, importing over 53,000 metric tons of finished magnets in FY25. The gap highlights a longstanding underutilization of domestic resources—currently, only state-owned IREL (opens in a new tab) (India) Ltd. mines and processes rare earths at scale.

At least six firms, including Sona Comstar (opens in a new tab) and Midwest Advanced Materials (opens in a new tab), have expressed interest. Midwest has committed to 500 tons of magnet output by late 2025, scaling to 5,000 tons in 2026, if the policy clears.

The scheme follows China’s recent export restrictions on rare earths and magnets, underscoring the urgency for India to secure its supply chains. A concept note has already circulated among India’s Ministry of Heavy Industries, Ministry of Mines, Finance Ministry, Atomic Energy Department, and NITI Aayog.

REEx Reflection

India is stepping onto the global magnet stage with intent. If executed quickly, the policy could help diversify global supply chains—but without refining and downstream integration, domestic magnets won’t materialize fast. Execution, not intention, will decide its impact.