India is poised to unveil an incentive scheme valued between ₹3,500–5,000 crore aimed at bolstering domestic production of rare earth minerals and permanent magnets—critical components in industries like EVs, defense, and high-tech manufacturing. A senior government official told The Economic Times the Cabinet is expected to greenlight the plan within the next two weeks, as part of a broader strategic push to fortify India’s critical-mineral supply chains.

This initiative comes amid tightening Chinese export controls on rare earths since April 2025, which have triggered global magnet shortages and piqued interest among at least five major Indian firms looking to locally source these vital materials. The proposed incentives will likely be distributed via a reverse-auction mechanism and will dovetail with regulatory amendments in the Mines and Minerals (Development & Regulation) Act, enabling easier domestic processing of these minerals.

India ranks among the top holders of rare earth reserves—possessing some 6.9 million tonnes, making it the world’s 5th-largest—yet lacks significant local magnet-manufacturing capabilities, relying heavily on imports (notably from China) with FY25 imports totaling over 53,700 tonnes. The new scheme is expected to help kick-start small-scale domestic magnet production before year-end.

This ₹5,000 crore push is part of India’s larger National Critical Mineral Mission, which also includes a separate ₹1,500 crore incentive program focused on recycling critical minerals like neodymium, lithium, nickel, cobalt and copper—encouraging domestic recycling using reverse-auctions, regulatory tweaks, and potential amendments to royalty and tailings usage policies.

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