As it prepares to roll out a major incentive scheme for domestic manufacturing of rare earth permanent magnets (REPM), the government is also encouraging domestic firms, both public and private, to actively acquire mineral assets overseas to secure a long-term supply of critical raw materials.
Official sources said that with domestic reserves of rare earth elements largely untapped due to regulatory restrictions and capacity constraints, the ministry of heavy industries (MHI) is building provisions into the upcoming incentive scheme that would support companies who would source raw materials from abroad. The ministry of mines, in parallel, is readying diplomatic and institutional support to help interested players identify and acquire mining blocks in rare earth-rich nations under the National Critical Mineral Mission (NCMM), officials added.
This two-pronged approach of stimulating domestic manufacturing while facilitating overseas resource access, is aimed at insulating the magnet value chain from global supply shocks and over-dependence on China, which currently accounts for 84% of the country’s rare earth magnet imports.
Overcoming Domestic Supply Constraints
Officials said the government is clear that achieving the scheme’s target of producing around 6,000 metric tonnes of REPM annually would be impossible through domestic raw material sources alone. Currently, the country produces just 400 MT/year of neodymium-praseodymium (NdPr) oxide through IREL, the sole miner and processor of rare earth oxides. This supports only 1,200 MT/year of magnet production, which is far short of projected demand.
“With scheme targets exceeding domestic raw material supply, the government will support private players and PSUs in acquiring mines, with NCMM funds aiding these acquisitions,” officials said.
To facilitate such acquisitions, the ministry of mines will initiate government-to-government engagements with resource-rich countries and coordinate partnerships between Indian firms and PSUs. Raw materials imported from such mines will also be exempt from import duties under the proposed framework.
Industry Interest and Future Collaborations
Among the companies that have shown interest by participating in stakeholder consultations are JSW Group, Mahindra Group, Kalyani Group, Sona Comstar, Midwest Advanced Materials, Entellus, and Proterial. Others, including large mining entities such as Hindalco, Vedanta, and Adani Group, are also expected to explore opportunities to supply raw materials to magnet manufacturers under the scheme. Public sector entities like IREL, KABIL, NMDC, and NTPC Mining may also join hands with private firms for overseas projects, officials said.
“All mining companies will find opportunities in exploring rare earth minerals abroad. With strong domestic demand and incentives in place, securing access to raw material overseas will be a guaranteed advantage,” officials said.
Despite having the world’s third-largest rare earth reserves at 6.9 million tonnes, India mined only 2,900 tonnes in 2024. Meanwhile, rare earth magnet imports surged to over 53,000 tonnes in FY25.
The ministry of mines has also signed memoranda of understanding (MoUs) with countries such as Australia, Argentina, and Chile, aimed at fostering cooperation on critical minerals and technology transfer.
