Strengthening Domestic Rare Earth Capacity
India Boosts Rare Earth Magnet Incentives to Strengthen Strategic Industries: India has announced plans to expand its Rare Earth Magnet Manufacturing Incentive Scheme to over ₹7,000 crore (approximately $788 million), nearly tripling the earlier allocation. This expansion is a strategic move to reduce dependence on China, which currently dominates more than 90% of global rare earth processing. The incentive aims to accelerate India’s position in the global clean energy and defence materials chain.
Static GK fact: The rare earth elements (REEs) include 17 metals like neodymium, dysprosium, and terbium, which are essential for high-performance magnets used in electric vehicles and wind turbines.
Response to Global Supply Chain Risks
The expansion comes after China’s export control measures in April 2025, which disrupted global magnet supplies. India’s decision aligns with similar initiatives by the United States, Japan, and the European Union to secure critical minerals and diversify supply chains.
Prime Minister Narendra Modi has stressed that critical minerals should never be “weaponised”, urging for stable and transparent trade in strategic resources.
Static GK Tip: India holds significant rare earth reserves in Odisha, Kerala, Tamil Nadu, and Andhra Pradesh, with deposits primarily managed by Indian Rare Earths Limited (IREL).
Structure and Benefits of the Incentive Scheme
The revised incentive proposal is awaiting cabinet approval and is expected to support around five domestic companies. It will offer a mix of Production-Linked Incentives (PLI) and capital subsidies to boost domestic magnet manufacturing.
Public sector undertakings are already forming partnerships with global mining companies to secure a steady supply of raw materials. The broader goal is to attract foreign magnet manufacturers to set up joint ventures or subsidiaries in India, building a sustainable industrial base for clean energy and defence applications.
Static GK fact: The PLI Scheme, introduced in 2020, covers 14 sectors including electronics, auto components, and advanced chemistry cells.
Technological and Environmental Challenges
Despite growing interest, India faces multiple hurdles. Limited technical expertise, long project lead times, and environmental concerns from mining and waste disposal pose challenges. The complex process of separating and refining rare earth elements requires advanced technology, which is still concentrated in China and Japan.
Government subsidies are therefore vital to make early domestic production viable and competitive against cheaper imports.
Research and Future Outlook
India is investing in research on alternative motor technologies such as synchronous reluctance motors, which reduce dependence on rare earth elements. The nation’s annual demand for rare earth oxides is around 2,000 tonnes, and foreign suppliers are showing strong interest in India’s rapidly growing electric mobility market.
However, if China relaxes export curbs for India, cheaper imports could slow down domestic investment in this emerging sector.
Static GK Tip: The Department of Atomic Energy (DAE) and Bhabha Atomic Research Centre (BARC) are key agencies in India’s rare earth extraction research and technology development.
Static Usthadian Current Affairs Table
India Boosts Rare Earth Magnet Incentives to Strengthen Strategic Industries:
| Topic | Detail |
| Total incentive value | ₹7,000 crore ($788 million) |
| Objective | Reduce dependence on Chinese rare earth imports |
| Key sectors supported | Electric vehicles, renewable energy, defence |
| Implementing mechanism | Production-linked and capital subsidies |
| Number of companies to benefit | Around five |
| Lead domestic body | Indian Rare Earths Limited (IREL) |
| Global context | Mirrors US, Japan, and EU diversification efforts |
| Key challenge | Limited domestic expertise and environmental risks |
| Annual rare earth oxide demand | 2,000 tonnes |
| Research focus | Synchronous reluctance motors and advanced magnet tech |
