What happened?
On June 5, 2025, following China’s April 4 decision to restrict rare earth magnet exports, the Indian government, under PM Modi, announced plans to offer financial incentives—such as production-linked subsidies and tariff exemptions—to encourage domestic manufacturing of these critical components. The Ministry of Heavy Industries is drafting a scheme to close the cost gap with cheaper Chinese imports and has held preliminary consultations with industry players.
Why it matters to India
India heavily relies on China for rare earth magnets—essential in electric vehicles, renewable energy systems, and defense applications. Supply shortages could halt auto production, according to industry warnings that stock could run out by late May or early June. Building a local supply chain is crucial for India’s technology security and industrial stability, reducing vulnerability to foreign export curbs and supply bottlenecks.