Reducing acute dependence, countering China's near monopoly: India readies Rs 5,000 crore scheme for rare earth minerals

The incentives in India's proposed programme will be distributed through a reverse bidding mechanism. (AI image)
India is readying a plan to reduce its acute dependence on China for rare earth minerals. The move comes at a time when China has imposed export curbs on rare earths and Indian industry has raised alarm bells on shortage of magnets and other components.
India is looking at a Rs 3,500-Rs 5,000 crore scheme to promote the production of rare earth minerals and derived magnets domestically, with approval expected within two weeks, according to a senior government official. "The priority is to start domestic-critical mineral production in the shortest time period," the official told ET.
China dominates global supply of rare earth magnets and has implemented export restrictions.
These essential minerals, vital for manufacturing automobiles, electric vehicles (EVs) and renewable energy infrastructure, face supply constraints.
The incentives in India's proposed programme will be distributed through a reverse bidding mechanism. This initiative follows an internal ministerial assessment that highlighted the necessity to diversify supply sources, given the substantial reliance on imports from China.
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"Fresh steps are being taken to boost domestic availability of critical minerals," the official said, noting that a minimum of five major Indian companies have informally shown interest in manufacturing these materials during discussions with government authorities.
India's Rare Earth Requirements
The automotive sector has highlighted concerns about Chinese restrictions and requested governmental assistance. In April, Beijing introduced mandatory special export licences for seven rare earth elements and associated magnets.
In India, manufacturers of EVs and wind turbines represent the primary consumers of rare earth elements, accounting for more than 50% of the projected domestic demand of 4010 metric tonnes in 2025. The overall requirement is anticipated to reach 8220 metric tonnes by 2030.
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Additionally, the government intends to modify the Mines and Minerals (Development and Regulation) Act to bolster the critical mineral initiative. Beyond regulatory adjustments, the Centre anticipates limited but commercially viable domestic production of rare earth permanent magnets to commence later this year.
Financial support has been allocated to Midwest Advanced Materials Private Ltd, Hyderabad, by the ministry of science and technology.
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