India has approved a 73-billion-rupee ($800 million) plan to develop domestic rare earth magnet production. This initiative aims to reduce the country's reliance on China for these essential components, which are crucial for electric vehicles, wind turbines, smartphones, medical scanners, and defense equipment. The strategy focuses on manufacturing magnets to achieve self-reliance more rapidly, with a goal to produce 6,000 tonnes of permanent magnets annually within seven years.
National Initiative for Magnet Production
The Indian government approved the 73-billion-rupee ($800 million) plan in November 2025. This initiative is designed to decrease India's dependence on foreign sources, particularly China, for rare earth magnets. The chosen approach prioritizes magnet manufacturing, a widely used rare-earth product, over developing a full rare earths ecosystem, which is considered more complex and costly.
Under the scheme, manufacturers will receive capital and sales-linked incentives. The target is to achieve an annual production of 6,000 tonnes of permanent magnets within seven years. This output is intended to meet India's rising domestic demand, which officials project will double within five years.
Current Reliance on China
India currently imports between 80% and 90% of its magnets and related materials from China. China processes over 90% of the world's rare earths. In 2025, India's imports of these materials amounted to approximately $221 million. This dependency was underscored in 2025 when Chinese export restrictions affected Indian carmakers and electronics firms, prompting exploration of alternative materials and supply chains.
Identified Challenges to Implementation
Experts have identified several challenges for India's domestic magnet production initiative:
- Industrial Expertise: India currently lacks significant commercial-scale experience in magnet manufacturing technology, unlike countries such as Japan, South Korea, and Germany. Strategic partnerships are considered necessary to import technology, develop workforce skills, and build indigenous capabilities.
- Research and Development: A strong research and development background is identified as essential for successful production, beyond financial investment alone. While some research centers and production plants exist in India, their output has not yet been publicly reported.
- Raw Materials: India possesses the world's third-largest rare earth reserves, accounting for approximately 8% of the global total. These reserves are primarily found in coastal sands and states. However, India contributes less than 1% to global rare earth mining, with only one operational mine located in Andhra Pradesh. Until recently, most of the output from this mine was exported to Japan. In June 2025, India reportedly suspended these exports to secure domestic supplies.
Broader International Efforts
Other nations, including the European Union and Australia, are also undertaking efforts to reduce their reliance on China for rare earths and related products.