The government is preparing to launch a strategic incentive program to kickstart local manufacturing of rare-earth magnets, crucial components in electric vehicles (EVs) and wind turbines. The move is aimed at reducing the country’s heavy reliance on Chinese imports, according to people familiar with the matter.
Several major Indian companies have already expressed interest in the initiative. These include Vedanta Group, led by billionaire Anil Agarwal; JSW Group, headed by Sajjan Jindal; and Sona BLW Precision Forgings Ltd., a key supplier of EV components.
Incentive Plan on the Horizon
The government is finalizing a ₹25 billion incentive plan to boost private investment in rare-earth magnet production. Sources say the policy will soon go to the cabinet, though the budget may change after internal reviews. The plan includes a two-year setup phase, followed by five years of incentives based on actual output.
Global Tensions Accelerate India’s Strategic Push
India’s move comes amid rising concerns over China’s dominance in the rare-earths supply chain, which has become a geopolitical flashpoint. China currently controls around 90% of the world’s rare-earth processing capacity and recently tightened export controls, impacting global supply chains. These disruptions have already affected automakers worldwide, including those operating in India, making local production of rare-earth magnets a critical national priority.
Challenges Remain Despite Global Momentum
While the proposed initiative aligns with global efforts to diversify rare-earth supply chains, India faces significant challenges. The government’s planned budget, though notable, is modest compared to global benchmarks, and the timeline is ambitious.
Building mines and processing plants takes years, with most expertise still concentrated in China. According to business-standard.com, the government views this initiative as key to supply chain resilience, clean energy, and domestic value creation in critical minerals.
