India Expands Rare-Earth Magnet Manufacturing Incentives

The Indian government is set to expand its incentive program for domestic rare-earth magnet manufacturing, aiming to nearly triple its current funding, according to a report from Bloomberg. The planned boost will increase the program to approximately $788 million, reflecting India’s strategy to reduce its reliance on Chinese imports in a sector where China currently holds a dominant position.

This significant increase from the initial $290 million allocation is pending government approval. If enacted, the expanded program will support India’s efforts to secure essential materials for critical industries, including electric vehicles, renewable energy, and defense. The announcement comes in the context of rising tensions in the rare-earth market, following China’s recent restrictions on the export of these vital resources.

China’s export controls, first introduced in April, targeted rare-earth elements used in military applications. The Chinese government cited national security concerns and the need to protect strategic resources as reasons for these measures. In October, the restrictions were further tightened, with Beijing implementing stricter licensing requirements that particularly affected exports related to the US defense and semiconductor sectors.

Following a recent meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea, China agreed to suspend its latest rare-earth export controls for one year, contingent upon reciprocal reductions in US tariffs and restrictions. This diplomatic development may impact the dynamics of the rare-earth market significantly.

China remains a powerhouse in the global rare-earth industry, accounting for over 90% of refining and 98% of magnet production, as reported by the International Energy Agency and industry analysts. In a sign of improving ties between India and China, several Indian companies including Continental India, Hitachi, and Jay Ushin have recently received licenses to import Chinese rare-earth magnets. These licenses, however, come with stipulations that restrict the export of these materials to the US and prohibit their use for defense purposes.

India’s move to enhance its rare-earth manufacturing capabilities is part of a broader strategy to bolster domestic production and secure supply chains in critical sectors. The expansion of this incentive program underscores the growing importance of rare-earth materials in the global economy and the geopolitical landscape. As nations navigate the complexities of international trade and resource management, India’s initiative may play a pivotal role in reshaping the rare-earth market.