India’s ambitious ₹7,300 crore incentive scheme to build a domestic rare earth magnet industry faces major challenges following China’s new export restrictions on key processing equipment. The curbs, imposed by China’s Ministry of Commerce, extend export licensing to machinery used in rare earth refining—such as centrifugal extraction systems and impurity-removal units—vital to magnet production.
With China controlling 61% of global rare earth output and 92% of processing, the restrictions threaten to derail India’s self-reliance plans, forcing reliance on costlier suppliers from Germany and Japan.
The Centre’s scheme—allocating ₹6,500 crore for capital investment and ₹800 crore for operations—aims to establish a local ecosystem for magnets used in EVs, wind turbines, defence, and electronics. However, China’s “dual-use” classification of such equipment and complex export licensing may delay imports, potentially impacting project timelines and viability.
Summary:
China’s export curbs on rare earth processing equipment pose a major obstacle to India’s ₹7,300 crore plan to develop a domestic magnet industry. The restrictions could delay project execution, raise costs, and undermine efforts to cut reliance on Chinese imports, despite strong government incentives and industry interest.
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