India Plans ₹1,345 Crore Incentive Scheme for Domestic Magnet Manufacturing Amid China Export Curbs

India has earmarked ₹1,345 crore to bolster domestic production of rare earth magnets, Heavy Industries Minister HD Kumaraswamy announced on Friday.

"A scheme has been circulated for Rs 1,345 crore subsidy for manufacturers of rare earth magnets. It is currently under inter-ministerial consultation. It is proposed that there will be two manufacturers as of now, however, this could change by the time the scheme is ready," said Kumaraswamy.

Kamran Rizvi, Secretary at the Ministry of Heavy Industry, said that only those manufacturers undertaking end-to-end processing—from rare earth oxides to finished magnets—will be eligible for the proposed subsidy scheme. The initiative is expected to include both private players and public sector enterprises, offering incentives to establish domestic capacity across the entire value chain.

This came after China had imposed export restrictions on seven critical rare earth elements (REEs) and finished magnets in retaliation for the US' punitive reciprocal tariffs. Under the revised rules, China mandated exporters to secure special licences and submit end-use declarations confirming materials will not be used in defence or re-exported to the US.

Earlier, PTI reported that the Ministries of Heavy Industries and Mines were in the process of finalising guidelines to incentivise local manufacturing of rare earth magnets and minerals—key inputs for sectors including telecom, electric vehicles and defence.

India, which imported over 80% of its 540 tonnes of magnets from China last financial year, started feeling the pressure across sectors. Minerals like lithium, cobalt, nickel and rare earth elements are vital for solar panels, wind turbines, electric vehicles and energy storage systems. Monthly Economic Review for May from the Ministry of Finance flagged China's recent move to curb rare earth exports as a “concerning development” with the potential to disrupt the global supply chain.

In response, India is accelerating its domestic exploration, processing and international partnerships in what is now clearly a resource-driven geopolitical contest.

Reuters also reported that automaker Mahindra & Mahindra and parts maker Uno Minda have already expressed strong interest in setting up domestic magnet production. Notably, India ranks third globally with REEs reserves totalling 6.9 million tonnes, right after China and Brazil.