Logo
Nuapada Bypoll
ଓଡ଼ିଆ | ENGLISH
Nuapada Bypoll
ଓଡ଼ିଆ | ENGLISH

high-stakes-hopes-in-ladakh-on-modis-participation-in-brics-summit-and-possible-meeting-with-chinese-president

Published By : Satya Mohapatra | November 3, 2025 1:51 PM
high-stakes-hopes-in-ladakh-on-modis-participation-in-brics-summit-and-possible-meeting-with-chinese-president

Proposed $788 million incentive package aims to build a domestic industry and reduce strategic reliance on China.

India is preparing a significant strategic investment to establish a domestic manufacturing base for rare earth magnets, critical components for modern industry. The government is reportedly considering a proposal to expand its incentive program to approximately Rs 70 billion ($788 million). This move represents a nearly threefold increase from a previous $290 million initiative, signaling a major push to secure materials essential for electric vehicles, renewable energy, and critical defence systems.

This policy shift is a direct response to strategic vulnerabilities exposed by China's overwhelming dominance in the sector. Beijing currently processes nearly 90% of the world's rare earth elements. Its recent tightening of export controls has disrupted global supply chains and highlighted the risks of over-reliance. The initiative aligns with a growing international effort to de-risk from this dependency, which Prime Minister Narendra Modi has previously underscored by calling for diversified and stable supply chains.

The proposed program aims to foster this new industry by supporting around five companies through a combination of production-linked incentives and capital subsidies, targeting both foreign and domestic capital. However, building this capacity from the ground up faces significant obstacles. Domestic production is not currently commercially viable without substantial government support. India also lags in the complex refining technology required, and such projects involve long timelines and high initial investment. Furthermore, mining these minerals carries environmental risks, as they are often found alongside radioactive elements.

While global suppliers have shown interest in India's market, the plan's success may hinge on global market dynamics. Analysts note that if China extends its recent easing of export restrictions to India, cheaper imports could undermine the financial incentive for building local facilities. Despite these challenges, the government is also funding research into alternative technologies, like synchronous reluctance motors, which could one day reduce the need for rare earths. Securing this supply chain remains critical to India’s long-term ambitions in electric mobility, renewable power, and defence manufacturing.

  • India is planning a major strategic push, backed by a proposed Rs 70 billion ($788 million) incentive package, to develop a domestic rare earth magnet manufacturing industry.
  • The initiative is a direct response to China's market dominance, as Beijing processes approximately 90% of global rare earths and has used export controls as a strategic tool.
  • The program aims to support roughly five companies but faces significant challenges, including a domestic technology gap, high investment costs, and environmental risks.
  • This industrial policy is considered critical for securing the supply chain for India's future in electric vehicles, renewable energy, and defence.