India is poised to initiate a significant program valued between Rs 3,500 crore and Rs 5,000 crore aimed at boosting domestic production of rare earth minerals and the magnets produced from them. A senior official has confirmed that the proposal may receive final government approval within two weeks, as reported by The Economic Times. This proposed scheme arises in response to China's decision in April to impose stricter export regulations on rare earth materials, a move that has disrupted global supply chains. These restrictions have resulted in bottlenecks for critical sectors, including the automotive and technology industries in the US, Europe, and India, all of which rely heavily on rare earth magnets. At least five prominent Indian companies have expressed initial interest in engaging with this initiative. According to the senior official, the scheme will function through a reverse auction model to distribute incentives, promoting competitive pricing and production efficiency, as stated in the report. The program is a result of a ministerial-level evaluation that underscored the necessity for India to secure alternative supply sources. Indian automobile manufacturers, alarmed by the supply shortage, have called upon the government for prompt assistance. India possesses approximately 6.9 million metric tonnes of rare earth reserves, ranking it fifth in the world. Nevertheless, the nation has not yet developed a manufacturing base for rare earth magnets. According to data for FY25, India imported 53,748 metric tonnes of these magnets, primarily from China.
Also read: India Unveils New EV Policy to Boost Local Manufacturing China, which produces nearly 90 percent of the global supply of permanent rare earth magnets, has strategically leveraged its dominant position amid ongoing trade tensions with the United States.
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