India hopes to make its own rare earth magnets for home use [Bloomberg via Getty Images]
In November 2025, India approved a 73 billion rupee ($800 million; £600 million) plan that could help it reduce its dependence on China in one of the most strategic areas of the global supply chain: rare earth magnets.
These small but powerful components are at the heart of modern life – used in everything from electric vehicles and wind turbines to smartphones, medical scanners and defense equipment.
Developing a complete rare earth ecosystem is expensive, complex and time-consuming. By focusing instead on magnets, one of the most widely used rare earth products, India aims to achieve self-sufficiency more quickly.
But its success will depend on how quickly the country manages to master the technology, secure materials and develop, experts say.
Under the program, selected manufacturers will receive capital and sales incentives to produce 6,000 tons of permanent magnets per year within seven years. The aim is to meet growing domestic demand, which authorities expect to double in five years.
Industry experts warn that money alone won’t be enough.
India today imports 80-90% of its magnets and related materials from China, which controls more than 90% of global rare earth processing. Official figures show the country imported some $221 million worth of magnets and related raw materials in 2025.
That dependence was exposed last year when China clamped down on exports during a trade dispute, hitting Indian automakers and electronics firms and forcing the electric vehicle (EV) industry to explore alternatives to rare earth magnets.
The disruption was temporary, but the lesson persists: Without a sovereign rare earths strategy, entire industries remain vulnerable.
India is not alone in struggling to find alternatives. The EU, Australia and others have launched similar efforts to loosen China’s grip. For many countries, “the timing of the controls was a surprise,” says Rajnish Gupta, tax and economic policy specialist at EY India.
India’s challenge, however, is more complex.
Neodymium is a type of rare earth element used to make powerful magnets [Bloomberg via Getty Images]
On the one hand, it lacks industrial expertise. Countries like Japan, South Korea, and Germany have spent years perfecting magnet manufacturing technology. By comparison, India has virtually no experience at commercial scale, experts say.
“It’s a good step in the right direction, but it’s only a start,” says Neha Mukherjee of Benchmark Mineral Intelligence, a consulting firm specializing in batteries and rare earth elements. “India will need strategic partnerships to import technologies, upskill its workforce and then build its own capabilities.”
Dr PV Sunder Raju, chief scientist at the National Geophysical Research Institute (NGRI), echoed this concern.
“It is not possible to just give Rs 73 billion and expect a product without a strong research and development track record,” he said.
There are several research centers, he emphasizes, which can be called upon. A facility was inaugurated in 2023 at the Bhabha Atomic Research Center, and another factory supported by public and private partners aims to produce 5,000 tonnes of magnets per year by 2030.
But neither has announced production yet.
There is also the question of raw materials. India has the third largest reserves of rare earths in the world, about 8% of the global total, largely in the sands of coastal states like Kerala, Tamil Nadu, Odisha, Andhra Pradesh, Maharashtra and Gujarat. Yet it represents less than 1% of global mining.
Only one mine is operational in the southern state of Andhra Pradesh and until recently most of its production was exported to Japan under a bilateral agreement. (In June 2025, however, India reportedly asked state mining company IREL to suspend such exports to ensure supplies for domestic needs.)
Most of India’s rare earth reserves are found in the sands along its coasts. [Corbis via Getty Images]
To be fair, India is actively working to expand its extraction and processing operations. For example, it created the National Critical Mineral Mission (NCMM), under which it committed to maintaining stocks and maintaining the resilience of its supply chain.
But even if it manages to draw on its own reserves of rare earths, it only has part of the elements necessary to manufacture magnets.
Thus, it has surpluses of lighter rare earths such as neodymium, but lacks extractable amounts of heavier elements like dysprosium and terbium, which are essential for many high-performance magnets.
This begs the question: even if the magnets are made in India, will the raw materials still come from China?
Concerns also remain about the scale of this operation. India already consumes around 7,000 tonnes of magnets per year, according to Mukherjee. Producing 6,000 tonnes by the early 2030s could still leave the country resource-strapped – and exposed – as demand continues to accelerate.
“If we don’t increase capacity, the problem will not be solved. We will always be dependent on China – and China will evolve,” says Mukherjee.
Experts also point out that another challenge will be pricing domestically produced magnets so that they are not undercut by imports. Chinese magnets are cheap and, unless Indian-made alternatives are competitively priced, imports could continue to dominate.
The solution, some say, may lie in incentives not only for manufacturers but also for buyers.
“We hope that Indian players will continue to flex their entrepreneurial energy and make the ecosystem work,” Gupta said.
Despite the challenges, the introduction of this program is a recognition of India’s ambition to strengthen its own rare earth ecosystem, and it is worth it, he adds.
“I think it’s definitely better than not having taken the plunge at all.”
