In a strategic and timely move to secure its position in the global critical minerals value chain, the Government of India is preparing to unveil a Rs. 3,500–5,000 crore (US$ 404–577 million) scheme to boost domestic production of rare earth minerals and magnets, a sector crucial for clean energy, electric mobility, and advanced electronics.

This ambitious initiative, expected to be officially approved within two weeks, is a direct response to the escalating global disruption caused by China’s export curbs on rare earth materials. These export restrictions have sent ripples through global supply chains, particularly affecting the automotive and electronics industries, which rely heavily on rare earth magnets such as neodymium, essential in electric vehicle (EV) motors, wind turbines, and high-performance electronics.

India, despite possessing the fifth-largest rare earth reserves globally — estimated at 6.9 million metric tonnes — currently lacks any indigenous capacity to manufacture permanent magnets, depending almost entirely on imports from China. In the financial year 2024–25, India imported 53,748 metric tonnes of rare earth magnets, according to government sources.

To reverse this dependency and build strategic autonomy, the government’s new scheme will include incentives through a reverse auction model, where eligible companies can bid for production-linked benefits. This model is designed to encourage competition and efficiency among Indian firms, making the rare earths ecosystem both scalable and commercially viable. Already, at least five major Indian companies have expressed interest in participating, indicating growing private sector enthusiasm for investing in critical minerals manufacturing.

India’s Rs 5000 crore plan to boost rare earth magnet production is part of a broader drive to reduce reliance on China, which has used its near-monopoly on rare earths as a geopolitical tool. In May 2025, China's rare earth magnet exports dropped to their lowest in five years, aggravating global shortages and prompting several nations, including India, to reassess their sourcing strategies.

One of the significant regulatory moves accompanying this scheme is the proposed amendment to the Mines and Minerals Development and Regulation (MMDR) Act, which governs the extraction and management of mineral resources in India. These amendments will likely simplify licensing procedures, improve private participation, and enable faster deployment of domestic mining and refining infrastructure.

Furthermore, the government has directed Indian Rare Earths Ltd (IREL) — the state-run enterprise responsible for mining and processing rare earths — to terminate its long-standing export agreement with Japan, particularly for neodymium, in order to prioritise domestic demand. This step underscores the urgent need to preserve critical mineral reserves for national use amid growing demand from India's electric mobility, renewable energy, and defence sectors.

Small-scale magnet production is expected to commence later in 2025, marking the beginning of what officials term a "national capabilities roadmap" for rare earths. The broader goal is to establish a full-stack rare earth value chain — from mining and refining to magnet fabrication — that supports India's transition to clean energy and ensures technological sovereignty.

Rare earths such as dysprosium, terbium, lanthanum, and especially neodymium, are critical for producing high-performance magnets used in electric vehicles, wind turbines, consumer electronics, and missile guidance systems. Without local capacity, India remains exposed to external supply shocks, especially from China, which currently controls over 80% of the global rare earth magnet production.

This policy comes at a crucial juncture when India is aggressively pursuing self-reliance in critical technologies under its Atmanirbhar Bharat mission, with significant public and private investments in semiconductors, batteries, EVs, and renewable infrastructure. Rare earth magnets are at the heart of this transformation, and India’s rare earth scheme 2025 could become a cornerstone of future industrial and strategic independence.

Analysts note that this move is not just about reducing imports — it’s about positioning India as a global alternative hub for the production of critical minerals. By creating an enabling ecosystem of mining incentives, magnet fabrication units, and export controls, the country aims to gradually emerge as a net exporter rather than a net importer of value-added rare earth products.

Moreover, this initiative is also aligned with India’s National Electric Mobility Mission Plan (NEMMP) and the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) schemes. A secure and scalable supply of rare earth magnets is critical for localising EV manufacturing and reducing the cost of key components, thereby making clean transportation more affordable and sustainable.

Experts believe that this bold step could also stimulate foreign collaborations and technology transfer agreements, as India looks to partner with countries like Australia, the United States, and Japan, all of which are also working to diversify away from Chinese dominance in rare earth supply chains.

In conclusion, India’s decision to launch a Rs 5000 crore plan to boost rare earth magnet production amid China's export restrictions is a decisive strategic intervention. It not only addresses an immediate supply risk but also lays the foundation for a future-ready industrial base, powered by self-reliance in clean energy and mobility technologies.

As regulatory frameworks evolve and Indian firms ramp up domestic capacity, the country’s place in the global rare earth minerals and magnet manufacturing value chain is set to rise. Through a calibrated mix of incentives, legislation, and strategic direction, India is demonstrating its commitment to becoming a global hub for critical technology components, making this one of the top news headlines in rare earths and clean tech sectors today.

The Upcoming IPOs in this week and coming weeks are Supertech EV, Valencia India, Neetu Yoshi, Abram Food, PRO FX Tech, Suntech Infra Solutions, Shri Hare-Krishna Sponge Iron, Icon Facilitators, Ace Alpha Tech, Globe Civil Projects, Sambhav Steel Tubes, Ellenbarrie Indutrial Gases, Kalpataru, HDB Financials, AJC Jewel.

The Current active IPO are  Aakaar Medical Technologies, Safe Enterprises Retail Fixtures, Mayasheel Ventures.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.