Govt plans ₹5,000 cr boost for rare earths amid China export curbs

Since April 2025, China's rare earth export curbs have caused global magnet shortages. At least five major Indian firms have informally shown interest in producing rare earth materials locally

 

India is finalising a ₹3,500-5,000 crore scheme to ramp up local production of rare earth minerals and the magnets made from them, The Economic Times reported today. A senior government official was quoted as saying that the plan could get official approval within two weeks.

 

Since April, China has limited its exports of rare earth materials. This move has caused difficulties for automakers and tech manufacturers around the world. Industries in the US, Europe, and India are facing shortages of essential magnets.

 

Domestic firms express interest

 

At least five major Indian companies have shown preliminary interest in producing rare earth materials, according to the government official quoted by The Economic Times. The government will offer benefits through a reverse auction process under this upcoming scheme, it is said.

   

The proposal for these incentives came after a ministerial review suggested India needed to diversify its sourcing channels. The automobile industry in particular raised concerns about the impacts of Chinese restrictions and requested government support.

 

Although India possesses 6.9 million metric tons of rare earth reserves, the fifth-largest globally, it lacks any domestic magnet manufacturing capacity. India relies on imported magnets, mainly from China. In the financial year 2024-25(FY25), India imported 53,748 metric tons of rare earth magnets, government data showed.

 

China’s control over global magnet supply

 

China makes around 90 per cent of the world’s permanent rare earth magnets. It has used this strong position in the ongoing trade conflict with the United States. Export controls introduced on April 4 affect not only seven specific rare earth elements but also magnets that include even small amounts of these materials.

 

China’s rare earth exports drop sharply

 

China’s exports of rare earth products dropped to a five-year low in May. Exports fell by 61 per cent compared to the same time last year — down to 2,117 tonnes, according to Bloomberg. This is the lowest since February 2020. These products, different from raw minerals and metals, are mainly in the form of magnets.

   

Govt planning regulatory tweaks

 

To support its critical minerals programme, the Indian government plans to amend the Mines and Minerals (Development and Regulation) Act. Alongside regulatory changes, the government expects small-scale commercial production of rare earth permanent magnets to begin later this year within India.

 

India to stop rare earth exports to Japan

 

India has asked state-run company Indian Rare Earths Ltd (IREL) to end a 13-year-old rare earth export deal with Japan. The government wants to ensure that local needs are prioritised. IREL also aims to improve India's capacity to process rare earth materials. Commerce Minister Piyush Goyal told IREL to halt the export of rare earths, especially neodymium, which is widely used in magnets for electric vehicle motors.