NextFin news, On Saturday, September 13, 2025, the Indian government revealed a strategic initiative to increase domestic production of rare earth minerals and magnets, crucial for electric vehicle motors and other high-tech industries, in response to China's export restrictions. The announcement was made by Union Minister for Heavy Industries and Steel, H D Kumaraswamy, during the Automotive Component Manufacturers Association of India’s annual session.
The government plans to introduce fiscal incentives and subsidies totaling approximately Rs 1,345 crore to support manufacturers in establishing processing facilities for rare earth magnets. This move aims to reduce India's heavy dependence on China, which currently dominates over 90 percent of the global rare earth magnet production capacity and has recently imposed export controls affecting global supply chains.
India's sole domestic source of rare earth minerals, Indian Rare Earth Magnets Limited, a public sector undertaking under the Department of Atomic Energy, will be supplemented by new processing units supported under this scheme. The initiative will cover capital and operational expenditures, provide tariff relief on key equipment, and help ensure a steady supply of these critical materials amid global restrictions.
Minister Kumaraswamy emphasized that the project is designed to strengthen India's participation in global value chains, reduce supply vulnerabilities, and support the automotive and semiconductor industries, which have been disrupted by China's export controls. The government is also working on inter-ministerial consultations to finalize the subsidy scheme.
According to reports, India possesses significant rare earth reserves but lacks advanced processing capabilities, making it reliant on imports for over 90 percent of critical minerals like lithium, cobalt, and nickel. Experts note that developing domestic processing infrastructure could take several years, underscoring the urgency of the government's current efforts.
Additionally, industry analysts highlight that China’s control over critical minerals extends beyond mining to processing and refining, creating strategic vulnerabilities for countries like India that are rapidly expanding their electric vehicle sectors.
India is also pursuing strategic partnerships with countries rich in critical minerals, such as those in the 'Lithium Triangle' of South America, to diversify its supply sources and enhance self-reliance.
This initiative aligns with India's broader goals of achieving energy security, supporting sustainable industrial growth, and reducing geopolitical risks associated with overdependence on a single supplier for critical raw materials.
Sources: Zee News Malayalam (September 13, 2025), Observer Voice (September 13, 2025), Lokmat Times (August 27, 2025), ORF Online (August 25, 2025).
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