Mahindra, Uno Minda eye making rare earth magnets in India as China curbs bite

Mahindra and Uno Minda are exploring rare earth magnet manufacturing in India as the government considers incentives and stockpiling amid Chinese export curbs

Mahindra & Mahindra, a major Indian carmaker, and Uno Minda, a leading auto components maker, are exploring plans to manufacture rare earth magnets in India. The move follows the Indian government’s proposal to offer incentives to reduce the country’s dependence on China, according to a Reuters report citing government sources.

 

China currently supplies nearly 90 per cent of the world’s rare earth magnets. In April, Beijing imposed restrictions on their export. While shipments have resumed to the US and Europe, Indian firms are still awaiting clearance, raising concerns among domestic automakers and suppliers.

Modi government pushes for stockpiles, self-reliance

To address the disruption, the government is considering creating reserves of rare earth magnets and providing incentives for local manufacturing. These magnets are critical to electric vehicles (EVs), electronics, and defence systems.

 

“Some companies have shown interest in investing or setting up rare earth magnet production, including Mahindra,” a senior government official told Reuters. “It will take a year or two to have our own production, but we have to find ways to be independent,” the official added.

Automakers express strong interest in domestic supply

In a recent meeting with the Ministry of Heavy Industries, Mahindra reportedly said it was open to collaborating with a partner or signing long-term supply contracts with local manufacturers. The company, which recently launched two electric SUVs, sees the investment as relatively low compared to the strategic importance of securing magnet supply. 

 

Uno Minda also expressed interest in domestic manufacturing during the same meeting. The company currently supplies components to automakers including Maruti Suzuki, which has already flagged potential production delays due to Chinese supply bottlenecks.

Sona Comstar was first to declare magnet plans

Sona Comstar, which supplies gears and electric motors to global firms such as Ford and Stellantis, was the first Indian company to announce plans to manufacture magnets domestically. It disclosed its intent to Reuters in June.

 

While Mahindra declined to comment, Uno Minda and the Ministry of Heavy Industries have yet to respond to media queries. Investment decisions are still being finalised and are likely to depend on raw material access and government incentives.

India’s rare earth reserves offer long-term potential

India holds the world’s fifth-largest reserves of rare earth minerals, making raw material availability less of a concern. However, the extraction and processing of these materials pose significant operational and regulatory challenges.

 

Rare earth mining in India is currently overseen by IREL, a government-owned firm. In 2024, IREL produced around 2,900 tonnes of rare earth ore, most of which is used by the country’s nuclear and defence sectors, with limited exports to Japan.

IREL to halt exports, boost domestic processing

Following the Chinese supply disruption, IREL is preparing to stop exports and ramp up its own mining and processing operations. The move is aimed at building domestic capacity for downstream uses such as magnet production.

JSW Steel eyes rare earth mining but faces approval wait

JSW Steel has expressed interest in mining rare earths within India but would need government approval. While magnet production can begin in the near term, mining projects could take several years to materialise, Reuters noted.

India explores overseas tie-ups to diversify sourcing

To secure a consistent supply of rare earth materials, the Indian government is also looking abroad. In December, IREL sent a team to Myanmar to assess reserves, and New Delhi is currently in talks with five Central Asian countries for joint exploration and mining projects.