Daijiworld Media Network – New Delhi

New Delhi, Nov 3: In a major move to boost domestic manufacturing and reduce dependence on China, India is planning to nearly triple the size of its incentive program for rare earth magnet production to over Rs 7,000 crore ($788 million), according to sources familiar with the development.

The proposal, which awaits cabinet approval, marks a sharp rise from an earlier $290 million plan aimed at securing critical materials essential for electric vehicles, renewable energy projects, and defence applications. The final figure may still vary, officials said.

The plan comes as several nations, including India, are working to build independent rare earth supply chains amid China’s tightening export controls. China currently processes nearly 90% of the world’s rare earth output. The move follows Prime Minister Narendra Modi’s earlier call to ensure critical minerals are not “weaponized” and that global supply chains remain diversified and stable.

The ambitious expansion, however, faces challenges such as limited funding, technological expertise, and lengthy project timelines. Domestic rare earth production remains economically unviable without government support, prompting state-run companies to lead initial efforts through overseas mining partnerships.

According to sources, the government initiative will support around five companies through a mix of production-linked and capital subsidies. While China recently issued its first licenses for the import of rare earth magnets to India, none have yet been granted to Indian-origin firms.

The Ministry of Heavy Industries has not yet commented on the development.

Meanwhile, the government is also backing research on “synchronous reluctance motors” — a magnet-free technology that could eventually reduce India’s reliance on rare earth materials. Several global suppliers have shown interest in catering to India’s growing demand, estimated at 2,000 tons of rare earth oxides annually.

India hopes the expanded program will attract leading global magnet manufacturers to set up local operations or joint ventures, cutting reliance on Chinese imports that have long benefited from state subsidies and aggressive pricing.

However, analysts warn that the plan could face hurdles if China eases export curbs for the US and Europe and extends similar access to India, which could make Chinese magnets cheaper and affect long-term domestic investment.