India is ramping up its bid to break China’s near-total control over the global rare earths market with a new $788 million plan to boost domestic magnet manufacturing. The initiative, which awaits cabinet approval, aims to secure critical mineral supplies vital for electric vehicles, renewable energy, and defense production.
According to report, the proposed expansion marks a sharp jump from the earlier $290 million incentive scheme. The move comes in response to China’s tightening of rare earth export rules in April a decision that sent shockwaves through global industries and exposed the dangers of relying on a country that processes about 90 percent of the world’s rare earth output.
Prime Minister Narendra Modi has repeatedly cautioned against “weaponizing critical minerals,” calling for more diversified and resilient supply chains. India’s plan aligns with similar global efforts by countries like the U.S., Japan, and Australia to counter Beijing’s dominance.
The new policy will support about five companies through production-linked and capital subsidies to boost rare earth magnet production. However, domestic mining of rare earths remains costly and technically challenging due to the radioactive byproducts and lack of local expertise. Despite China’s recent move to issue import licenses for Indian usage, none have yet been granted to Indian-origin firms.
To reduce dependency, India is also investing in magnet-free technologies such as synchronous reluctance motors, which could revolutionize electric vehicle powertrains by eliminating rare earth requirements altogether.
With rising global demand for rare earth oxides estimated at 2,000 tons annually in India international suppliers are showing growing interest in the Indian market. Meanwhile, state-owned enterprises are taking the lead in securing overseas mining partnerships to ensure steady raw material inflows.
Analysts warn, however, that India’s progress could be undercut if China decides to extend its export relaxations to India, potentially flooding the market with cheaper Chinese magnets and discouraging local investment.
India’s $788 million move signals both ambition and urgency — a bold attempt to position itself as a serious player in the global critical minerals race and to secure the backbone of its clean energy and defense future.