India Scales Up Rare‑Earth Magnet Production in Hyderabad to Counter China’s Export Curbs
India is taking decisive steps to reduce its dependence on Chinese rare-earth magnets—critical components for electric vehicles (EVs), electronics, defense systems, renewable energy, and advanced technology—following export restrictions imposed by China. Union Minister for Coal and Mines, G Kishan Reddy, emphasized the nation’s commitment to self-reliance in strategic materials.
Hyderabad Magnet Production Hub
In July 2025, the central government announced plans to start manufacturing permanent rare-earth magnets in Hyderabad within 3–4 months, under the leadership of the National Forensic Science and Technology Mission (NFTSM). The government will soon transfer production technology to private factories. This will be supported by Production-Linked Incentives (PLI) and a ₹1,345 crore support scheme aimed at catalyzing large-scale domestic manufacturing.
This initiative aligns with the vision of Prime Minister Narendra Modi to secure global mineral supply chains and reduce import dependence.
Responding to China’s Export Controls
In April 2024, China imposed export restrictions on certain rare-earth materials—used in nearly 90 percent of global magnet production—leading to supply disruptions around the world. India, which was almost entirely dependent on imports from China for rare-earth magnets, experienced sharp supply cuts, prompting urgent domestic policy action.
Crunching the Numbers and Domestic Capacity
For the fiscal year ending March 2025, India imported over 53,700 tonnes of rare-earth magnets, highlighting the country’s critical import dependency.
Despite having the world’s fifth-largest reserves of rare-earth elements, India has limited mining and processing capabilities. These operations are mostly conducted by state-run Indian Rare Earths Limited (IREL), which is now being encouraged to shift focus from exports to domestic production. IREL plans to produce 450 tonnes of neodymium by FY26, with plans to double capacity by FY30.
Industry Engagement and Private Participation
Several Indian companies are exploring rare-earth magnet production with government support. These include Mahindra & Mahindra, Uno Minda, Sona Comstar, and JSW Steel.
Mahindra & Mahindra is evaluating potential joint ventures or long-term procurement agreements for magnets used in electric vehicles. Sona Comstar has expressed early interest in local production. JSW Steel has shown intent to enter rare-earth mining, though it may face regulatory delays.
Strategic Policy Framework and Incentives
The ₹1,345 crore magnet manufacturing incentive forms part of a broader critical minerals strategy. In January 2025, the Union Cabinet approved the ₹16,300 crore National Critical Mineral Mission (NCMM), which aims to attract ₹18,000 crore in investments for mining, processing, and downstream manufacturing.
The Mission was first announced in the 2024–25 Union Budget by Finance Minister Nirmala Sitharaman, who highlighted the importance of critical minerals for national security and economic resilience.
Global Supply Diversification
India is also working to diversify its rare-earth supply sources beyond China. This includes seeking imports from countries like Myanmar and Central Asian nations.
To preserve domestic availability, the government has instructed IREL to pause exports to nations such as Japan and prioritize local industries.
Why This Matters
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National Security – Rare-earth magnets are vital for defense systems, satellites, aerospace, and sensor technology.
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Economic Growth – Critical for electric vehicles, wind turbines, medical devices, and electronics.
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Supply Chain Sovereignty – Supports India’s “Make in India” mission and reduces strategic vulnerabilities.
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Clean Energy Transition – Essential for motors and generators used in renewable energy applications.
Timeline and Future Outlook
| Timeline | Milestone |
|---|---|
| 3–4 months | NFTSM to begin permanent magnet production in Hyderabad |
| 1–2 years | Full-scale manufacturing by private firms under PLI incentives |
| FY26–FY30 | IREL to scale rare-earth processing and domestic supply capacity |
India’s proactive approach to developing domestic rare-earth magnet manufacturing marks a pivotal step in strengthening national security, ensuring clean energy transition, and building resilient industrial capabilities. Backed by strategic investments, policy support, and industry collaboration, India is well on its way to becoming a global hub for critical mineral technologies.