The Indian government is expanding its incentive program for domestic manufacturing in a critical industry currently dominated by China
India is planning to significantly boost its incentive program for domestic rare-earth manufacturing, aiming to nearly triple its current size, Bloomberg has reported, citing government sources.
The program is set to be expanded to approximately $788 million, as the South Asian nation seeks to challenge China’s dominance in the sector.
The planned incentive package, which is still pending approval, represents a substantial increase from the initial $290 million allocation, the report added. If approved, it will provide a significant boost to India’s efforts to secure essential materials for key sectors such as electric vehicles, renewable energy, and defense.
The initiative comes as tensions in the rare-earth market have risen following China’s move to restrict exports of rare-earth metals. The minerals, critical for sectors such as defense, electronics, and batteries in electric vehicles, emerged at the center of a trade dispute between the US, EU and China.
Beijing first introduced export controls on certain rare-earth elements used in military applications in April, citing concerns over national security and the need to protect strategic resources. In October, it expanded these controls, introducing stricter licensing requirements and extraterritorial provisions that particularly impact exports related to the US defense and semiconductor sectors.
However, following last week’s meeting between US President Donald Trump and his Chinese counterpart Xi Jinping in South Korea, Beijing agreed to suspend its latest rare-earth export controls for a period of one year in exchange for reciprocal US cuts on tariffs and restrictions.
China dominates the global rare-earth market, accounting for over 90% of refining and 98% of magnet production, according to the International Energy Agency and industry analysts.
Meanwhile, last week Indian media outlets reported that at least three Indian companies – Continental India, Hitachi, and Jay Ushin – have received licenses to import Chinese rare-earth magnets in a sign of easing ties between the two South Asian neighbors.
The licenses come with conditions that restrict the export of the materials to the US and prohibit their use for defense purposes.
