In a decisive move toward strategic autonomy, India is set to triple its incentive program for rare earth magnet manufacturing to over ₹7,000 crore ($788 million), according to a Bloomberg report. The proposal, awaiting cabinet approval, marks one of the country’s most ambitious industrial policy steps yet—designed to reduce dependence on China’s near-monopoly over critical materials that fuel the world’s clean energy and defense industries.
Rare earth magnet is a vital components in electric vehicles (EVs), wind turbines, smartphones, and missile guidance systems, making them a cornerstone of the modern technological economy. Currently, China processes about 90% of the world’s rare earths, a dominance that has raised alarm across global supply chains. Beijing’s tightening of export controls earlier this year exposed just how vulnerable manufacturers worldwide are to geopolitical disruptions.
Prime Minister Narendra Modi’s government has made it clear that India must not be held hostage to such dependencies. Echoing global concerns, Modi warned against “weaponizing critical minerals,” underscoring the need for diversified, secure supply lines. The tripling of incentives from an earlier $290 million scheme signals India’s intent to emerge as a credible alternative hub in the spectrum of rare earth magnet, for rare earth production and magnet manufacturing.
Under the expanded plan, around five companies are expected to receive government backing through production-linked and capital subsidies, aiming to create a domestic manufacturing base that can eventually compete on cost and scale. The initiative aligns with India’s broader “Atmanirbhar Bharat” (self-reliant India) vision, which seeks to bolster strategic industries from semiconductors to defense equipment.
Yet, India’s rare earth ambitionsm, in the arena of rare earth magnet in particular, face formidable challenges. Mining and processing these minerals are environmentally complex, often involving radioactive byproducts that require advanced handling and waste management systems. Moreover, India currently lacks both the technical expertise and the scale needed to match China’s decades-long head start in refining and magnet fabrication.
To address this gap, the government is funding research into alternative technologies, such as synchronous reluctance motors, which can operate without rare earth magnet. If successful, these innovations could not only reduce import dependence but also position India as a leader in next-generation green technologies.
At the same time, global investors are watching closely. Demand for rare earth oxides in India is projected at about 2,000 tons annually—a scale that could attract foreign suppliers and joint ventures. State-owned enterprises are already pursuing mining partnerships abroad, particularly in resource-rich regions of Africa and Australia, to secure a long-term pipeline of raw materials.
However, India’s progress could be tempered by external developments. If China relaxes export restrictions to include India—as it recently did for the U.S. and the EU—cheap imports could flood the market, undermining domestic investment.
Still, the policy shift reflects India’s growing confidence on the global stage. By tripling its rare earth incentive program, New Delhi is not just responding to market forces—it is asserting its aspiration to lead the next era of clean technology manufacturing. The road ahead may be steep, but the message is unmistakable: India is determined to move from dependence to dominance in the minerals of the future, concentration on rare earth magnet is a step only.