India has approved a 73 billion rupee ($800 million; £600 million) plan to reduce its dependence on China in the strategic rare earth magnets industry. These small but powerful components are essential for modern technologies, from electric vehicles and wind turbines to smartphones and defence equipment.
The plan aims to incentivise selected manufacturers to produce 6,000 tonnes of permanent magnets annually within seven years, meeting the country’s rising domestic demand, which officials expect to double in five years. This move comes after India was hit by Chinese export restrictions during a trade dispute last year, exposing its vulnerability without a sovereign rare earth strategy.
However, experts warn that money alone will not be enough. India currently imports 80-90% of its magnets and related materials from China, which controls more than 90% of global rare earth processing. The country lacks industrial expertise, having virtually no commercial-scale experience in magnet-making compared to nations like Japan, South Korea and Germany.
“This is a good step in the right direction, but it’s only a start,” says Neha Mukherjee of Benchmark Mineral Intelligence. “India will need strategic partnerships to import technology, skill up its workforce and then build its own capabilities.”
Another challenge is securing the necessary raw materials. India holds the world’s third-largest rare earth reserves, but accounts for less than 1% of global mining. It has surpluses of lighter rare earth elements like neodymium, but lacks extractable quantities of critical heavier elements like dysprosium and terbium for high-performance magnets.
Experts also question whether India can scale up production fast enough to meet growing domestic demand, warning that without sufficient capacity, the country could still remain dependent on Chinese imports. Pricing domestically made magnets competitively will be crucial to avoid being undercut.
Despite the obstacles, the introduction of the scheme is a recognition of India’s ambition to bolster its rare earth ecosystem. As one industry expert says, “This is certainly better than not having taken the step at all.”