NEW DELHI, June 25, 2025: The Indian government is considering implementing a subsidy program to increase domestic production of rare earth magnets, which are crucial components of electronics and electric cars.
India primarily sources its rare earth materials and magnets from China, so this subsidy programme is seen as an essential step in reducing strategic reliance on outside sources. For high-performance automotive applications, such as power steering systems in internal combustion engine (ICE) vehicles and traction motors in electric two-wheelers and passenger EVs, rare earth magnets are essential. India is currently largely dependent on imports, mostly from China.
The urgent need for domestic capacity development is demonstrated by the recent application of 30 Indian automakers for authorisation to import rare earth magnets from China to the Directorate General of Foreign Trade (DGFT). The final amount of subsidies will be decided through a competitive bidding process; industry stakeholders have requested subsidies ranging from 20% to 50%.
“The amount will depend on the bids. If it is below ₹1,000 crore, it may be approved by the finance and heavy industries ministers. Otherwise, it will need to go to the Cabinet,” MHI Secretary Kamran Rizvi informed mediapersons.
Heavy Industries Minister H.D. Kumaraswamy also said that a final decision on this initiative is anticipated within the next 15 to 20 days. Stakeholder consultations are currently underway to assess the level of support required for this programme, which will subsidise investments in turning rare earth oxides, like neodymium-iron-boron (NdFeB), into high-performance magnets.
Rizvi clarified that if the total incentives exceed ₹1,000 crore, the plan will require approval from the Union Cabinet. “A company from Hyderabad has expressed interest and committed to delivering 500 tonnes of magnets by December,” Kumaraswamy said.
He added that in order to rush the proposal, talks are still going on with the Mines Ministry and other pertinent departments.
India is looking to Japan and Vietnam as alternative procurement sources for short-term needs after China’s recent export restrictions on rare earth materials caused supply disruptions for international automakers and semiconductor manufacturers, officials said.
According to ministry officials, Indian Rare Earths Ltd., a public sector organisation under the Department of Atomic Energy, has significant domestic reserves that could be used to produce 1,500 tonnes of magnets.
