India To Triple Incentives For Rare Earth Magnet Manufacturing: Report

India is preparing to significantly expand its incentive programme for rare earth magnet manufacturing, with plans to allocate over Rs 70 billion ($788 million) to the sector, nearly three times the size of an earlier proposal, according to a Bloomberg report.

The move comes at a time when India is seeking to reduce its reliance on China’s dominance in the global supply chain.

According to the report, the revised plan awaits cabinet approval and marks a substantial increase from the previously proposed $290 million scheme.

The initiative aims to bolster domestic capacity in critical materials used in electric vehicles, renewable energy systems, and defence applications.

The move comes as nations worldwide accelerate efforts to diversify rare earth supply chains after China, which processes nearly 90 per cent of global output, tightened export controls in April amid its ongoing trade tensions with the United States.

Prime Minister Narendra Modi has previously cautioned that critical minerals “should not be weaponized,” urging for more stable and diversified global supply systems.

Under the proposed plan, around five companies are expected to benefit through a combination of production-linked incentives and capital subsidies.

State-owned enterprises are also taking the lead in exploring overseas partnerships to secure raw material supplies, given that domestic extraction and processing remain financially challenging and environmentally sensitive.

While India is betting that the expanded programme will attract global magnet manufacturers to establish local subsidiaries or joint ventures, the plan could face hurdles if China relaxes its export restrictions for other regions such as the US or EU something that might make Chinese magnets cheaper and slow India’s efforts to build its own base.

Additionally, the government is supporting research into synchronous reluctance motors, an alternative technology that could reduce future dependence on rare earth elements altogether.

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