India to Offer Incentives for Local Rare Earth Magnet Manufacturing

India is gearing up to strengthen its position in the electric vehicle supply chain by launching a ₹1,345 crore scheme to incentivise local rare earth magnet production, reducing its reliance on imports from China, as per news reports.

Government's ₹1,345 Crore Push to Boost Domestic Magnet Production

On September 12, 2025, Union Heavy Industries and Steel Minister HD Kumaraswamy announced financial support for the domestic manufacturing of rare earth magnets. The programme intends to cover both capital and operational costs for eligible firms. Rare earth magnets like neodymium-iron-boron (NdFeB) are critical in EV motors, power steering units, and even semiconductors. 

Currently, China's monopoly over the global supply poses risks to India's industrial resilience. The proposed scheme will initially support 2 manufacturers building facilities to process rare earth oxides into usable magnets.

Addressing Trade Risks Through Localisation Strategy

Recent export restrictions from China have disrupted global supply chains across the automotive and semiconductor sectors. India’s move aims to safeguard a steady supply and reduce tariff burdens currently faced by domestic manufacturers. With Indian Rare Earth Magnets Ltd being the lone custodian under the Department of Atomic Energy, the government seeks to expand national capacity by backing new entrants in rare earth refining and magnet production.

Read More: India’s DLI 2.0: Incentives and Mandates to Spur Domestic Semiconductor Demand!

Strategic Importance for EV and Defence Sectors

India's localisation move is driven by the rising use of rare earth magnets in electric mobility, renewable technologies, aerospace, and defence systems. These magnets offer high resistance, improved heat tolerance, and power-efficient performance, making them indispensable in green technologies. Ensuring indigenous production will plug import-dependence gaps and secure India’s position in future technologies.

Fiscal Relief and Global Value Chain Integration

The scheme also promises relief on high tariffs for critical equipment and aims to integrate Indian manufacturing into global value chains. By offering stable fiscal support, the government expects to bridge cost inefficiencies and attract investment in the downstream processing of rare earth elements.

Conclusion

India’s ₹1,345 crore incentive scheme is a strategic move to reduce reliance on Chinese imports and ensure long-term supply security of rare earth magnets, crucial for EVs and advanced electronics. By supporting local manufacturers, India is aligning industrial capability with global demand for high-performance materials in the technology sector.

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