India plans ₹1,345 crore rare earth magnet subsidy scheme amid China curbs

India is finalising a ₹1,345 crore scheme to subsidise domestic production of rare earth magnets, Union Heavy Industries Minister H D Kumaraswamy said on Friday, as the country seeks to reduce reliance on Chinese supplies critical for electric vehicles and defence.

Inter-ministerial consultations are underway for the plan, which proposes incentives for two select manufacturers, including private firms and state-run companies, officials said.

"(The) Rs 1,345 crore scheme has (proposed) two manufacturers," Kumaraswamy said in response to a query while addressing a press conference here.

Kamran Rizvi, Secretary in the Heavy Industries Ministr, said that the scheme envisages "end-to-end" support to two manufacturers for the conversion of rare earth oxides into magnets, which is under inter-ministerial consultation.

“We are interested in magnets. Anybody who gives us magnets will get incentive,” Rizvi told reporters, adding the draft has been circulated among ministries and may soon go to the Union Cabinet for approval.

The subsidy will facilitate investment for establishing processing facilities for companies to convert rare earth oxides into magnets.

China, which controls over 90% of global processing, tightened export restrictions on seven rare earth elements and finished magnets in April.

India sourced more than 80% of its 540 tonnes of magnet imports from China last fiscal year.

Rare earth minerals such as samarium, gadolinium, terbium, dysprosium and lutetium are used in EV motors, braking systems, smartphones, and missile technology.

Neodymium-iron-boron (NdFeB) is used for high-performance automotive applications such as traction motors in electric vehicles (two-wheelers and passenger vehicles) and power steering motors (in passenger vehicles) in both electric vehicles and internal combustion engine vehicles.

The subsidy is expected to facilitate investments in processing facilities. Currently, Indian Rare Earths Ltd, under the Department of Atomic Energy, is the country’s sole repository of rare earth minerals.