India's rare earth plan faces fresh hurdles as China tightens exports
New Delhi, Oct 27, 2025
India's ₹7,300 crore plan to strengthen rare earth magnet production may face delays as China restricts exports of key processing equipment, raising costs and affecting project viability
India’s plan to boost domestic production of rare earth minerals and magnets, key materials for electric vehicles and high-tech industries, could hit a major roadblock. Beijing’s latest decision to tighten controls on the export of rare earth processing equipment is raising concerns among Indian industry leaders and government officials working on the ₹7,300 crore incentive scheme, according to a report by The Economic Times.
Earlier this month, China’s Ministry of Commerce expanded export restrictions to include machinery and materials used for producing and processing rare earth elements. These controls cover items such as centrifugal extraction machines and intelligent impurity-removal equipment, both essential for processing ionic rare earth ores.
Exporters of such products will now require special licences and must declare whether the items could serve dual purposes, both civilian and military. The move, China said, is intended to “safeguard national security”, echoing similar measures introduced earlier this year on medium and heavy rare earth materials, the news report said.
India’s self-reliance meets cost hurdles
The Indian government recently cleared an incentive programme through the Expenditure Finance Committee, aimed at encouraging domestic production of rare earth magnets. The plan proposes ₹6,500 crore for capital support and ₹800 crore for operational costs, with Cabinet approval expected soon.
However, industry experts say the new Chinese restrictions could delay or complicate India’s plans.
The Economic Times quoted a source as saying that the equipment and technology needed to process rare earth minerals largely come from China. Sourcing them from other countries like Germany or Japan is possible, but far more expensive, which will push up project costs significantly, the source added.
Another executive noted that while India aims to build its own processing ecosystem, it still relies on imported machinery to begin operations. Without access to affordable equipment, the incentive scheme may lose its momentum,” he said.
₹7,300 crore incentive scheme
The programme, likely to be named Scheme to Promote Sintered Rare Earth Permanent Magnet Manufacturing in India, is designed to create a completely domestic manufacturing ecosystem. It aims for an annual output of up to 6,000 tonnes and is planned to run for seven years.
The main objective is to develop a homegrown value chain that can turn NdPr (neodymium-praseodymium) oxide into sintered NdFeB (neodymium-iron-boron) magnets. These magnets are essential for industries such as automobiles, electronics, wind energy, and defence.
China’s dominance in rare earths
According to the International Energy Agency, China accounts for 61 per cent of global rare earth production and 92 per cent of the processing capacity. These minerals are vital for making electric motors, wind turbines, industrial machinery and consumer electronics.
Industry officials say nearly 50 applications are pending under the Indian scheme, but China’s latest move could slow progress toward self-reliance in this critical sector, the news report said.
[The Business Standard]
