Centre Plans Incentives to Boost Domestic Rare Earth Magnet Production

The Union Government is preparing fiscal incentives to promote domestic production of rare earth magnets, amid concerns over supply disruptions currently dominated by China, Union Minister H D Kumaraswamy said on Friday.

Kumaraswamy, who holds the portfolio for Heavy Industries and Steel, added that a dedicated scheme is being designed to provide targeted support to the sector, covering both capital and operational expenditures. The initiative aims to bridge cost gaps, mitigate high tariffs on key equipment, and ensure continuity of supply in the face of increasing global restrictions.

“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,” Kumaraswamy said.

Officials noted that the move is part of the government’s broader strategy to strengthen India’s critical raw material supply chain, enhance domestic manufacturing capabilities, and reduce dependence on foreign suppliers for strategic technologies such as electric vehicle components.

The initiative is expected to attract investment, encourage innovation, and bolster India’s position in the global electric mobility and high-tech manufacturing sectors.