India Prepares ₹5,000-Crore Incentive Plan to Scale Up Domestic Rare Earths Production

In a bid to incentivise the production of rare earth minerals and derived magnets, India is likely to approve a scheme. According to The Economic Times, India may float a ₹3,500-5,000 crore scheme in next 15 days to start domestic-critical mineral production in the shortest possible time.

Citing sources, the newspaper stated that the sops under the proposed scheme will be offered through a reverse auction process. The decision came after an internal ministerial review flagged the he need for diversification in the wake of acute dependence on Chinese imports.

As per the report, at least five large domestic companies expressed their willingness to produce such materials in consultations with the government.

China monopolises nearly 90% of the world’s rare earth magnets and abruptly curtailed exports on 4 April, rattling global supply chains, especially in the arena of electric vehicles and high-tech manufacturing. Indian auto-makers, including Maruti Suzuki, Tata Motors and Bajaj Auto, have warned that production could grind to a halt as soon as July without prompt magnet shipments.

To address the issue, India has taken various steps which includes issuing End User Certificates for imported Chinese magnets, deploying government delegations to Beijing to speed up approvals and even halting exports of domestically mined rare earths to Japan so that strategic reserves are reserved for homegrown industries.

India’s rare earth reserves are estimated at approximately 6.9mn tonnes, the world’s fifth‑largest, yet much of the refining and production capability remains undeveloped. State-run firm, IREL, has been mining rare earth materials for years, which are mainly used by the atomic energy and defence units, with most supplies for other uses still imported from China. With a processing capacity of 6 lakh tons per annum, IREL produces key minerals like ilmenite, rutile, zircon, sillimanite, and garnet. It also operates a Rare Earth Extraction Plant in Chatrapur, Odisha and a Rare Earth Refining Unit at Aluva, Kerala.