【By Observer Net, Chen Sijia】The Indian government is seeking to expand the rare earth industry and increase its domestic rare earth magnet production capacity in order to "reduce dependence on China." According to a report by Bloomberg on November 26, the Indian government has approved a rare earth magnet manufacturing plan worth 7.28 billion rupees (approximately 5.8 billion yuan), aiming to reduce import reliance in fields such as electric vehicles, aerospace, defense, and renewable energy.

The Indian government held a cabinet meeting on the 26th and approved the plan to promote the production of rare earth magnets domestically. After the meeting, the Minister of Electronics and Information Technology, Ashwini Vaishnaw, stated: "Currently, all rare earth permanent magnets used in India are imported... With the completion of this project and the establishment of new factories, our import dependence is expected to be reduced to almost zero."

Vaishnaw said that the rare earth magnet manufacturing plan will last for seven years, with the construction of five facilities each with an annual capacity of 1,200 tons, increasing India's rare earth magnet annual production capacity by 6,000 tons, thereby enhancing "self-sufficiency" capabilities. He said: "This will be a major strategic victory for India. Without rare earth magnets and semiconductors, manufacturing would hardly be possible."

The Hindu newspaper reported that the total fiscal expenditure for the project is 7.28 billion rupees, including a capital subsidy of 7.5 billion rupees for building rare earth magnet manufacturing facilities, as well as a 6.45 billion rupee incentive for rare earth magnet sales over five years.

On November 26, the Minister of Electronics and Information Technology of India, Vaishnaw, announced the rare earth magnet manufacturing plan The Hindu

Shailesh Chandra, President of the Society of Indian Automobile Manufacturers, believes: "This move is an important step in building a resilient and stable supply chain, especially for components critical to electric vehicle production. The plan is expected to accelerate the adoption of clean mobility solutions and support India's broader sustainable development goals."

Rare earth magnets are essential components in fields such as electric vehicles, aerospace, defense, and renewable energy. China controls more than 90% of global rare earth processing capacity. Although India ranks third in rare earth reserves, with confirmed reserves of 6.9 million tons, it lacks mining and processing capabilities.

Previously, sources told Bloomberg that after China introduced measures to restrict rare earth exports, industries such as automobiles in India faced pressure, prompting the Indian government to seek support for the domestic rare earth magnet industry to reduce reliance on China. Sources said that the Indian government's plan has attracted initial attention from several companies, including the mining giant Vedanta Group and the steel giant JSW Group.

Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI) think tank in India, believes that reverse engineering of imported mid-to-low-end technology products, providing incentives for domestic production, and long-term investment in deep technology manufacturing will help India reduce its reliance on other countries. "The window of opportunity for action is narrow, but the urgency is self-evident," he said.

However, Abhijit Kulkarni, a partner at EY-Parthenon, pointed out in an interview with CNBC that so far, India contributes less than 1% to global rare earth production. The lack of rare earth mining and processing technology and backward infrastructure are major challenges currently facing India.

In October, Shushant VC Parashar, an assistant professor of geopolitics and international relations at Manipal University, also wrote that India faces technological bottlenecks in the rare earth industry. Although India has relevant professional capabilities at the laboratory level, there are obvious shortcomings in industrial-scale production capacity, quality control, and waste management.

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