The Indian government is set to significantly enhance its support program for the production of rare-earth magnets, aiming to nearly triple its financial backing, according to a report by Bloomberg citing government sources. This initiative is part of India”s strategy to bolster its domestic manufacturing capabilities in an industry heavily influenced by China.
The proposed expansion of the incentive program could reach approximately $788 million, a substantial increase from the previous allocation of $290 million. This move reflects India”s determination to secure vital materials necessary for various sectors, including electric vehicles, renewable energy, and defense.
This initiative comes amid rising tensions in the rare-earth market, particularly after China implemented export restrictions on rare-earth metals. These minerals play a crucial role in industries such as defense, electronics, and electric vehicle batteries, and have become central to ongoing trade disputes involving the United States and the European Union with China.
In April, China first introduced export controls on specific rare-earth elements deemed critical for military applications, citing national security concerns. The restrictions were further tightened in October, with the addition of more stringent licensing requirements, which particularly affected exports related to the US defense and semiconductor industries.
However, following a recent meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea, China agreed to pause its latest rare-earth export controls for one year, contingent upon reciprocal reductions in tariffs and restrictions by the US.
Currently, China holds a dominant position in the global rare-earth market, controlling over 90% of refining and 98% of magnet production, as reported by the International Energy Agency and various industry analysts. In a related development, Indian media reported that at least three companies in India—Continental India, Hitachi, and Jay Ushin—have received licenses to import rare-earth magnets from China, signaling a potential thaw in relations between the two nations. However, these licenses come with stipulations that prevent the export of these materials to the US and prohibit their use in defense applications.
