India is preparing a major plan to boost local production of rare earth minerals and magnets. The government will launch a scheme worth Rs. 3,500 to Rs. 5,000 crore (US$ 404–577 million) to reduce dependence on Chinese imports. This move comes after China placed new limits on rare earth exports, causing shortages around the world. India has the fifth-largest rare earth reserves in the world, with 6.9 million metric tonnes. But the country currently imports all rare earth magnets, mostly from China. In FY25 alone, India imported 53,748 metric tonnes of these magnets.

Government to Offer Incentives and Change Mining Laws

To support local manufacturing, the government will offer financial incentives through a reverse auction system. At least five top Indian companies have already shown interest. Small-scale magnet production is expected to start later this year. Regulatory changes are also being planned. The Mines and Minerals Development and Regulation Act may be updated to make mining and processing rare earth minerals easier in India. This will help speed up local production and attract private investment.

India Ends Export Deal with Japan to Ensure Local Supply

Indian Rare Earths Ltd (IREL) has been asked to end its export deal with Japan. This step will ensure that rare earth elements like neodymium are available for local industries. Neodymium is widely used in electric vehicle motors and wind turbines. With China’s rare earth magnet exports at a five-year low, India’s rare earth plan aims to protect the country from global supply shocks. The plan will also support clean energy, defence, and advanced technology sectors under the “Make in India” mission.