India's $800M Rare Earth Magnet Plans to Break From China's Grip, Innovate or Be 'Dependent on China'

India has just greenlit a 73B-rupee ($800M or £600M) plan for the country become self-sufficient in the so-called critical, complex supply chain of rare-earth magnets, among other critical elements of modern technology, and be free of China's grip.

A rare earths strategic leap

The Indian government-supported program in November 2025 approved a program to promote local manufacturing of rare-earth magnets required in electric vehicles, wind turbines, smartphones, and military equipment.

This project is meant to reduce the dependency on China, which is already processing more than 90% of the rare-earth elements in the world, and is also supplying a big portion of Indian imports.

India, with a value of imports of approximately $221M, is keen on creating its own ecosystem when China increased its muzzle on exports in the previous year, momentarily shaking India's industry.

The plan will motivate the manufacturers who will be chosen to manufacture 6,000 tonnes of permanent magnets annually in the seven-year span. This is a high target that aims at satisfying the increasing domestic demand, which is expected to go up by half in the coming five years.

The monetary investment is high but some experts argue that money will not bring real self-reliance.

Challenges beyond funding

The process of creating an industry of rare-earth magnets is not an easy one, and it demands the use of sophisticated technology, a professional labour force, and the availability of natural resources.

The third largest reserves of rare-earths in the world, much of them along its coast, India has traditionally lacked any commercial-size mining or processing facility.

The majority of reserves are unexploited or exported primarily to Japan as a result of bilateral agreements however, in recent times, attempts have been made to retain a larger amount of raw materials in the country.

Japan, South Korea, and Germany are some countries that have developed their magnet-making capacities over decades and now have mature ecosystems.

India, on the other hand, has practically no commercial large-scale magnet production. Such a gap shows that strategic partnership, transfer of technologies, and training of work forces is needed, though according to experts, this is essential and will require years to achieve.

Neha Mukherjee of Benchmark Mineral Intelligence told BBC, 'India will need strategic partnerships to import technology, skill up its workforce and then build its own capabilities.'

It is not only magnet production that is a challenge, but the procurement of raw materials, in particular the heavier rare-earth elements like dysprosium and terbium that are needed to make high-performance magnets.

The reserves of India are endowed with lighter rare-earth elements such as neodymium, but do not have adequate amounts of the heavier elements, which are also imported in China.

Raw material reliance and geopolitical risks

To make the situation even worse, India keeps being dependent on raw materials. The production of domestic magnets might be successful, but there is still uncertainty on whether the required heavy rare-earth elements would be sourced in India or they will have to stick with imports.

This reliance calls into question long-term resilience, particularly with the increasing demand for rare-earth magnets to the world, and the rise in the adoption of electric-vehicles as well as renewable-energy developments.

The increasing production of magnets to meet the existing consumption, estimated to range at about 7,000 tonnes in a year, is still a challenge. With 6,000 tonnes of production, this may still not be enough since demand will go up, leaving India at the mercy of an external supply shock.

The experts caution that until India picks up the pace at capacity building and creation of a competitive market environment, the Chinese imports might still prevail since they are charged low prices.

'If we do not scale capacity, the problem doesn't get solved. We'll still be dependent on China - and China will scale,' Mukherjee said.

To achieve the success of India, both local manufacturers will require incentives to produce and also to sell their commodities at prices advantageous to the customers. An integrated policy may be required to safeguard local manufacturers and promote a sustainable ecosystem comprising buyer incentives and import tariffs.