In a strategic move to boost self-reliance in rare earth magnet production, the Indian government is working on a ₹1,345 crore subsidy scheme aimed at incentivising manufacturers to build domestic capacity. The scheme, currently under inter-ministerial consultation, is expected to support both private companies and public sector enterprises.

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End-to-End Processing a Key Requirement Response to China’s Export Restrictions A Step Toward Strategic Independence

“A scheme has been circulated for ₹1,345 crore subsidy for manufacturers of rare earth magnets. It is currently under inter-ministerial consultation,” said Kumaraswamy, a government official involved in the planning.

The initial plan proposes that two manufacturers will be selected to avail the incentives. However, this number may change by the time the scheme is finalised, depending on the final structure and response from the industry.

End-to-End Processing a Key Requirement

According to Kamran Rizvi, Secretary, Ministry of Heavy Industry, only manufacturers that perform end-to-end processing—from rare earth oxides to finished magnets—will be eligible for the subsidy. This condition aims to ensure that the entire value chain is developed within India, reducing reliance on imports.

The scheme will encourage setting up of domestic infrastructure for rare earth processing, a sector that is currently heavily dependent on China.

Response to China’s Export Restrictions

This initiative comes in response to recent developments in global trade. In April this year, China imposed export restrictions on seven key rare earth elements and finished magnets. The new rules require Chinese exporters to obtain licences and submit end-use declarations, particularly barring usage in defence or re-export to the US.

Given that China controls a dominant share of the global rare earth supply, these restrictions have raised alarms in several countries, including India, which is looking to secure its supply chains in critical technology components.

A Step Toward Strategic Independence

Rare earth magnets are vital components used in electric vehicles, wind turbines, electronics, and defence systems. By incentivising local production, the Indian government hopes to build a resilient and self-sufficient ecosystem, especially as the country ramps up its clean energy and manufacturing ambitions.

If implemented successfully, this scheme could mark a significant step in reducing India’s dependence on Chinese imports, while strengthening the domestic industrial base in high-tech sectors.