India’s ₹7280 Crore Answer To China’s Rare Earth Monopoly
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- Published 09 Jan 2026
Rare-earth magnets have evolved from being an industrial input to a strategic priority.
In November 2025, the Union Cabinet approved a ₹7,280 crore scheme to manufacture rare earth magnets in India. It was not a routine policy announcement but a strategic move.
As electric vehicles scale up, renewable energy expands, and defence modernisation accelerates, magnets have become a pressure point.
Without them, motors stall, turbines slow, and supply chains break. What once felt like a niche material is now a national priority.
So what exactly are rare earth magnets?
These are high-performance magnets made from rare-earth elements.
They are small, powerful, and extremely efficient. You will find them in electric vehicle motors, wind turbines, smartphones, electronics, aerospace equipment, and defence systems.
Modern high-tech manufacturing depends on them.
There are few substitutes, and none that offer the same performance at scale.
The global picture explains why the urgency is rising.
Demand for rare earth elements is growing steadily, but supply is tightly concentrated.
By value, the market is expected to grow from about $3.9 billion in 2024 to over $10 billion by 2035, translating into roughly 9.4 per cent annual growth.
Volume demand is also climbing, from around 91 kilotonnes today to nearly 150 kilotonnes by 2040. Yet supply does not grow as easily.
By 2030, the top three mining countries are expected to account for around 75 per cent of global output.
Refining is even more concentrated, with the top three countries controlling about 92 per cent of global capacity.
China sits at the centre of this ecosystem.
It controls nearly 70 per cent of global rare earth production. The United States follows far behind, with just over 11 per cent. Other producers like Myanmar, Australia, Thailand, and Nigeria contribute single-digit shares.
India’s share is less than one per cent.
This imbalance becomes even more striking when reserves are considered.
India has some of the world’s largest rare earth reserves, estimated at around 6.9 million metric tonnes. Only China and Brazil have more.
Yet India mines a tiny fraction of what it holds. Less than 0.05 per cent of its reserves are actually extracted.
In contrast, the United States mines over 2 per cent of its reserves, while China, despite its scale, still extracts far more in absolute terms.
The result is near-total import dependence.
In 2024, India imported approximately 2.3 kilotonnes of rare-earth magnets. Around 65 per cent of these imports came from China, followed by Japan and a combined share from Hong Kong and South Korea.
Any disruption in these supply lines directly impacts India’s EV plans, renewable targets, and defence manufacturing. This is where domestic manufacturing becomes critical.
India’s magnet demand is expected to triple by FY30, rising from about 2 kilotonnes to 6 kilotonnes.
Rare earth magnets account for roughly 30 per cent of an EV motor’s cost, making them too important to outsource indefinitely.
Wind energy adds further pressure. India has set a target of 500 GW of renewable capacity by 2030, and direct-drive wind turbines rely heavily on Neodymium-Iron-Boron magnets.
Without local supply, these ambitions remain vulnerable.
The ₹7,280 crore scheme is designed to address exactly this gap.
It targets an annual production capacity of 6,000 tonnes of rare earth permanent magnets.
The focus is on high-value REPMs rather than low-end components. Five manufacturers will be selected through competitive global bidding.
Incentives are split between ₹6,450 crore in sales-linked support over five years and ₹750 crore in capital subsidies for setting up manufacturing facilities.
The idea is not just to produce magnets, but to build capability and scale.
Despite holding large reserves, India has stayed import-dependent for decades. This scheme aims to change that equation.
Rare earth magnets may be small, but their role is outsized.
They sit at the intersection of clean energy, electric mobility, and national security.
By pushing hard now, India is laying the groundwork for long-term strategic independence in some of the most critical industries of the future.
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