India to roll out incentives for local rare earth magnet production: HD Kumaraswamy

India is moving to reduce its dependence on Chinese supply of rare earth magnets by preparing a set of fiscal incentives to spur local manufacturing, Union Heavy Industries and Steel Minister HD Kumaraswamy said on Friday.

The minister explained that a new scheme is being designed to provide targeted financial support, covering both capital investments and operating costs.

"The ministry is actively addressing vulnerabilities in critical raw materials. Recognising that rare earth magnets are central to EV motors and currently dominated by Chinese supply, we are preparing fiscal incentives to encourage domestic production," the union minister said while addressing Automotive Component Manufacturers Association (ACMA) annual meet.


The initiative will help offset high tariffs on critical equipment, close cost gaps, and secure steady supplies in the wake of mounting global trade restrictions.

"We are working on a scheme aimed at powering India's participation in global value chains through targeted support for both capital expenditure and operational expenditure requirements of the industry. This will help bridge cost gaps, offer tariff relief on key equipment and ensure continuity of supply in the face of rising global restrictions," Kumaraswamy added.

“Rare earth magnets are vital for EV motors, yet the global supply chain is largely controlled by China. To safeguard India’s position and build resilience, we are preparing incentives to encourage domestic production,” Kumaraswamy said in a video message at the annual session of the Automotive Component Manufacturers Association (ACMA).

Scheme to Strengthen Supply Chain

The government is already discussing a Rs 1,345-crore program to support rare earth magnet production, with incentives for two manufacturers to set up processing facilities that convert rare earth oxides into usable magnets.

Currently, Indian Rare Earth Magnets Ltd, under the Department of Atomic Energy, is the country’s only custodian of these resources.

China’s recent curbs on metal exports have disrupted auto and semiconductor industries worldwide, underlining the urgency for India to localize its supply.

Rare earth magnets—such as neodymium-iron-boron (NdFeB)—are widely used in advanced automotive systems, from electric vehicle traction motors to power steering units in both EVs and traditional combustion vehicles.