India Prepares Rare Earth Magnet Incentives Amid Supply Concerns

India is holding discussions with manufacturers to set up long-term stockpiles and start local production of rare earth magnets, as per news reports. The Ministry of Heavy Industries is working on a fiscal incentive plan to support this, including a proposal to cover the price gap between Indian-made magnets and cheaper Chinese imports.

China’s Export Restrictions 

On April 4, China announced restrictions on exports of rare earth materials. This has affected multiple industries globally, especially automotive and electronics. China is responsible for about 90% of global rare earth magnet processing.

Auto Industry Faces Shortages

In India, the auto sector has raised concerns about potential supply disruptions. The Society of Indian Automobile Manufacturers (SIAM) has informed the government that production could begin to halt as early as the end of May or early June. Some companies may continue operations until the end of June, but delays in sourcing materials are expected.

Short-Term and Long-Term Measures

As per news reports, to address the immediate situation, the government is planning to send a delegation of automotive industry executives to China to seek quicker approvals for shipments. There are also discussions about allowing tariff exemptions on machinery needed for magnet manufacturing within India.

Read more: India Resumes Imports of Rare Earth Magnets Used in EVs from China!

Current Production and Exports

Although India holds around 6.9 million tonnes of rare earth reserves (as per the US Geological Survey), only a small amount is currently mined. The state-owned IREL handles rare earth mining, mostly for defence and atomic energy. India continues to export neodymium, a key component in magnets to countries like Japan, due to lack of domestic processing. Between January and April 2025, India exported nearly $7 million worth of neodymium to Toyota Tsusho.

Critical Mineral Mission 

In April, the National Critical Mineral Mission was launched to improve domestic availability. Exploration for minerals like neodymium has started under this initiative.

Conclusion

The government is drafting a plan to support domestic rare earth magnet production, while short-term efforts focus on avoiding supply disruptions due to China’s export restrictions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.