India to Finalise Incentives For Rare Earth Magnet Processing In 15-20 Days: Heavy Industries Minister

In response to constraints in the supply of rare earth magnets from China, the Indian government is formulating a policy to provide subsidies for domestic processing of rare earth magnets. According to a senior official, this policy is expected to be finalized within the next 15-20 days.

“We have been in discussions with the Ministry of Mines. [for providing incentives for rare earth magnet processing]. Both ministries are working on it. The ultimate decision will be taken within 15-20 days,” Minister of Heavy Industries HD Kumaraswamy told reporters on Tuesday.

Rare-earth magnets play a critical role in the automotive industry, especially as the sector accelerates towards electrification, automation, and efficiency. These magnets are important, particularly for EVs, due to their higher performance in small form factors, enhanced energy efficiency and critical functionality in both powertrains and digital systems.

China produces 60% of the world’s rare earth elements and controls around 90% of the global refining capacity. At nearly 2,850 tonnes, India was estimated to be the fifth-largest importer of rare earth permanent magnets and magnet alloys from China last year. 

In April, China implemented stricter rules on exporting rare-earth elements and related magnets, requiring import permits. These changes were initially seen as a response to tariffs imposed by the U.S., but the impact is now rippling across global automotive supply chains and other industries.

The import approvals from China are now difficult and complex. It mandates an end-use declaration confirming the magnets will not be used for military purposes, along with certifications from multiple Indian ministries, the Chinese embassy, and final export clearance from Chinese authorities, creating significant logistical hurdles for importers.

Over 30 applications for import permits from Indian companies were pending with China in the second week of June, the minister said.

The government is exploring the implementation of incentives for rare earth elements as part of a broader strategy to diversify its supply chain and mitigate its substantial dependence on Chinese sources.

The minister noted that a Hyderabad-based company [likely to be Midwest Advanced Materials] has expressed interest in magnet production. The company has committed to supplying 500 tonnes of magnets by the end of this year, with plans to increase production to 5,000 tonnes next year.

“We do not know the quantum of subsidy required yet. Stakeholder consultations are going on. So, varied responses have come. Somebody wants 50%, somebody 20%. So, it will be subject to a competitive bid, then we will know the quantum of support required,” said Kamran Rizvi, secretary at the Ministry of Heavy Industries.

The secretary emphasized that the magnet made in India must be competitive globally. He highlighted that the price difference between rare earth oxides and rare earth magnets on the Shanghai stock exchange is minimal, hardly 5%.

“So, there is a feeling that since China has a monopoly on it, it keeps the price of magnets very low,” the secretary noted. "Therefore, we need to determine the level of incentives needed. Specifically, we must calculate the investment companies need to convert rare earth oxides into magnets and decide on the government support." 

Indian Rare Earth Limited (IREL), a public sector undertaking that specializes in mining and refining rare earth metals, is the sole repository of rare earths in India. They have enough rare earths to make 1,500 tons of magnets in a year, the minister noted.

Meanwhile, government officials noted that rare earth oxides are available in Japan and Vietnam as well, and efforts are going on to bring them from there.