India is taking a big step to reduce its dependence on China by starting its own production of rare earth magnets within the next few months.
These magnets are important parts used in electric vehicles, wind turbines, defence equipment, and space technology. The move comes after China restricted exports of key rare earth elements, causing major global supply problems and affecting industries in India.
India Set to Start Domestic Production of Rare Earth Magnets Amid China Tensions
On July 12, 2025, Union Minister for Coal and Mines G. Kishan Reddy announced a big step forward for India’s independence in critical minerals . India will start producing rare earth magnets domestically within the next 3 to 4 months. This is a major move to reduce India’s complete dependence on China for these essential materials, which are crucial in electric vehicles, wind turbines, defence equipment, and satellites. China currently controls around 90% of the world’s rare earth processing and 70% of the magnet production. This gives it a major global advantage, especially in strategic industries. In April 2025, China hit back at U.S. tariffs by restricting exports of seven rare earth elements: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These new rules require detailed paperwork and proof that the materials won’t be used in military products or sold to the U.S. As a result, global rare earth magnet exports dropped by 75% in just two months. This created big problems for companies worldwide, especially in India, which imported about 53,748 metric tons of magnets in 2024-25, with over 80% coming from China. Indian electric vehicle makers, like Bajaj Auto, have raised alarms that delays in getting magnets may seriously affect production. The Society of Indian Automobile Manufacturers has asked the Indian government to talk to China and resolve the issue quickly. To fight this crisis, the government is launching a fast-track project to start producing rare earth magnets in India. The Non-Ferrous Materials Technology Development Centre (NFTDC) in Hyderabad has already built a small facility to process magnets. This will be used to transfer the technology to private factories in the next few months. Minister Reddy said this effort is being coordinated across different ministries and even discussed directly with Prime Minister Narendra Modi. The government has set aside 1,345 crore to support companies entering the rare earth magnet space. It follows the successful Production Linked Incentive (PLI) schemes used in sectors like electronics and solar panels. There are also plans to spend Rs.3,500 to 5,000 crore more to help build processing plants and magnet factories. The goal is to make it financially easier for companies to enter this strategic industry. Indian companies are now showing strong interest: Mahindra & Mahindra, which makes electric SUVs, is ready to partner with local magnet producers. Uno Minda, which supplies big brands like Maruti Suzuki, is exploring magnet production. Sona Comstar, a parts supplier to Ford and Stellantis, has already announced plans to produce magnets in India. This shows that Indian companies are serious about reducing their dependence on Chinese imports. In another bold move, the government has suspended a 13-year-old export deal with Japan, where state-run Indian Rare Earths Limited (IREL) used to supply rare earths to a Toyota group company. In 2024, this deal accounted for nearly 1,000 metric tons, or one-third of IREL’s output. Now, these materials will be kept for domestic use, especially to feed India’s new magnet manufacturing plans. IREL is also boosting its production: IREL's Odisha plant can currently process 11,200 tons of mixed rare earths per year, and it is planning to double it to 20,000 tons soon. In Kerala, another IREL plant makes high-purity rare earth oxides like lanthanum, cerium, neodymium-praseodymium, and gadolinium, used in high-tech applications. India launched the National Critical Mineral Mission (NCMM) in January 2025, with ₹16,300 crore in funding and another one with ₹18,000 crore expected from public companies. Key goals include 1,200 mineral exploration projects by 2030. Domestic production of at least 15 critical minerals. Building strategic reserves to deal with supply shocks. Incentives worth ₹1,500 crore for recycling 400 kilotons of minerals from old products. The Geological Survey of India (GSI) is already running 195 exploration projects, including 35 in Rajasthan. At the recent 17th BRICS Summit in Brazil, PM Modi called out the monopolization of rare earths, hinting at China without naming it. He proposed a BRICS-wide initiative for mineral security.
