India Plans ₹5,000 Crore Boost to Rare Earth Sector
India is finalising a major ₹3,500–5,000 crore incentive scheme aimed at kickstarting domestic production of rare earth minerals and magnets, a sector long overshadowed by China’s overwhelming global dominance. The move marks a strategic push to reduce India’s acute dependence on Chinese imports and build a resilient domestic supply chain for these critical raw materials.
A senior official involved in the planning said, “The priority is to start domestic-critical mineral production in the shortest time period.” This urgency stems from the central role rare earths play in the manufacturing of electric vehicles, wind turbines, defence systems, and semiconductors — sectors vital for both economic growth and national security.
Rare Earths: A Strategic Priority
India possesses substantial reserves of rare earth elements, yet currently lacks the downstream processing and refining capacity to fully leverage them. The new incentive scheme will not only cover the mining and processing of rare earths but will also encourage the development of magnet production infrastructure. This end-to-end approach is designed to create a self-sufficient ecosystem capable of meeting domestic demand and participating in global exports.
The plan is expected to be approved in the coming weeks, and the government aims to ensure swift rollout with clear milestones. The focus will be on inviting private players with technological capabilities, while also encouraging joint ventures to bring in foreign expertise without ceding control of critical resources.
Reducing China’s Near Monopoly
China currently controls more than 70% of the world’s rare earth refining capacity, a situation that has raised alarms in capitals across the globe. India’s move mirrors a broader international trend where countries are diversifying supply chains to reduce geopolitical vulnerabilities. In this context, India’s initiative is both economically prudent and strategically necessary.
By building local capacity, India stands to reduce import dependency, lower input costs for key industries, and assert itself as a reliable alternative in the global rare earth supply chain. Officials believe this effort will also attract significant private investment and create thousands of jobs across the mining and high-tech sectors.
Outlook and Next Steps
While India is still in the early stages of developing rare earth refining and magnet manufacturing capabilities, the proposed scheme signals a policy shift from merely exporting raw minerals to creating value-added products domestically. The success of this program could redefine India’s position in the global technology and green energy sectors over the next decade.
Once approved, the rollout will include project-level clearances, land allocation for mining operations, and incentive disbursement based on performance metrics. This marks one of the most significant steps yet under the government’s broader strategy to build industrial self-reliance.
