Government plans Rs. 5,000 crore (US$ 577 million) boost for rare earths amid China export curbs

India is preparing to launch a Rs. 3,500–5,000 crore (US$ 404–577 million) scheme aimed at boosting domestic production of rare earth minerals and the permanent magnets derived from them. The plan, expected to receive official approval within two weeks, comes in response to China’s recent restrictions on exports of rare earth materials, which have disrupted global supply chains, especially in the automotive and technology sectors. Although India holds the world’s fifth-largest rare-earth reserves (6.9 million metric tonnes), it currently lacks any indigenous magnet manufacturing capacity and depends heavily on imports, primarily from China. In FY25, India imported 53,748 metric tonnes of rare earth magnets, according to government data. The government is likely to offer incentives via a reverse auction model, with at least five major Indian companies having already shown interest in participating.

To support this push, regulatory changes to the Mines and Minerals Development and Regulation Act are also being considered. Small-scale domestic magnet production is expected to begin later this year. Additionally, India has instructed Indian Rare Earths Ltd (IREL) to terminate a long-standing export agreement with Japan, especially for neodymium, a critical element in electric vehicle motors, to ensure domestic availability. These moves come as China’s rare earth magnet exports fell to a five-year low in May 2025, worsening shortages. By ramping up local capabilities, India aims to insulate itself from external supply shocks and build self-reliance in critical technologies essential for clean energy and mobility.

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