India plans to kickstart rare-earth magnet output to cut China dependence
Jul 9, 2025
The policy blueprint is likely to be submitted for cabinet approval soon, the people said. The final outlay for the program is subject to internal consultations and could change
A proposed plan by India to spur local production of rare-earth magnets has drawn initial interest from a clutch of large conglomerates, people familiar with the matter said, as the country seeks to cut its reliance on China for these vital electric-vehicle and wind-turbine materials.
The Indian government is planning an incentive program worth as much as 25 billion rupees ($290 million) for private sector firms manufacturing these magnets, said the people, who asked not to be named as the details are not public.
Billionaire Anil Agarwal’s mining giant Vedanta Group, Sajjan Jindal-led JSW Group and EV parts maker Sona BLW Precision Forgings Ltd. are among those who have shown keenness in this initiative.
The policy blueprint is likely to be submitted for cabinet approval soon, the people said. The final outlay for the program is subject to internal consultations and could change, they said.
India is accelerating efforts on this front after China, which controls about 90% of the world’s rare earths processing, tightened export controls on rare earths amid a trade war with the US. This has disrupted supply chains for global automobile makers, including those operating in India.
‘Don’t Weaponize’
Indian Prime Minister Narendra Modi highlighted the need for a reliable supply of critical minerals at the BRICS gathering in Rio de Janeiro over the weekend. “It’s important to ensure that no country uses these resources for its own selfish gain or as a weapon against others,” Modi said at the event.
The South Asian nation aims to support three to four large companies in the production of about 4,000 tons of neodymium and praseodymium-based magnets using locally-mined raw materials over a period of seven years, according to the people and a policy proposal seen by Bloomberg News.
There will be a two-year gestation period and incentives will be rolled out over five years following the start of manufacturing, the people said. India, with a rapidly growing electric vehicle sector, is considering an investment of up to 6 billion rupees for every 1,000 tons of capacity under the program, they added.
“Our interest in rare-earth magnet manufacturing stems from its strategic importance to green technologies,” a Vedanta spokesperson said in an email, adding that these minerals were “fast becoming new levers of global influence.”
The Ministry of Heavy Industries and JSW did not respond immediately to an email seeking comments.
Producing magnets will help secure the supply chain for Sona BLW — one of the largest Indian makers of traction motors for electric vehicles, Chief Executive Officer Vivek Vikram Singh told Bloomberg News. The company may seek a partner with a firm to develop technology for the magnets as well, Singh added.
India is mulling incentives for rare-earth magnet makers, Heavy Industries Minister H.D. Kumaraswamy said at an event in New Delhi last month, without elaborating.
While the government’s effort to boost rare earths is in line with a worldwide push, its budget is modest and its timeframe remains ambitious. Mines and processing facilities can take years to build, and know-how stays heavily concentrated in China.
Despite their name, rare earths are not geologically rare. But mining them economically is difficult, and often poses environmental risks due to their low concentrations and association with radioactive elements.
Nascent Efforts
While India has long sought to boost production either domestically or through overseas projects, those efforts remain nascent. State-owned Khanij Bidesh India Ltd. is leading initial moves with mining concessions in Latin America and is talks with Argentina, Zambia and Australia among others.
Currently, producing magnets in India without subsidies is nearly impossible. The necessary oxide is supplied by state-owned Indian Rare Earths Ltd., and a project’s return on investment in this sector is negative without both capital and operating subsidies, the people said.
According to the proposed blueprint, the government will invite companies to bid for annual production capacity between 500 tons and 1,500 tons.
To qualify, manufacturers must meet strict norms, including the requirement that half of the value of the final product must come from locally produced neodymium-praseodymium oxide, an ingredient crucial for making high-performance magnets, according to the proposal.
The domestic sourcing requirement will rise to 80% by the fifth year of manufacturing, it added.
[Bloomberg]
