India's Rare-Earth Magnet Gap: A China Bottleneck?

India faces a significant challenge in its rare-earth magnet supply chain, despite possessing substantial geological resources. The country imports all its sintered neodymium-iron-boron permanent magnets, a critical component for electric vehicles, wind turbines, and defense systems. This reliance stems from a lack of downstream processing and manufacturing capacity, which is overwhelmingly concentrated in China. China accounts for 91% of refined rare-earth output and 94% of sintered permanent-magnet production, giving it considerable influence over global supply and pricing.

Recent events, such as China's April 2025 export controls on rare-earth elements, have underscored this vulnerability, causing temporary disruptions in overseas production. In response, India initiated a ₹7,280-crore permanent magnet scheme in November 2025, aiming to establish 6,000 tonnes of annual integrated capacity. This initiative seeks to support the entire process from rare-earth oxides to finished magnets.

However, assessments by IREL, DMRL, and BARC estimate India's demand for rare-earth permanent magnets will reach 8,220 tonnes annually by 2030. If the government-backed plants operate at full capacity, they would meet approximately 73% of this projected demand, leaving a shortfall. Implementation also poses hurdles, with a two-year setup period and ongoing updates to manufacturer-selection documents as of July 2026. India's broader National Critical Mineral Mission, with ₹16,300 crore in government expenditure, aims to bolster the entire critical mineral value chain.

Building a comprehensive mine-to-magnet industrial base requires substantial investment, estimated at $60 billion globally over the next decade to diversify supply chains outside China. For India, immediate opportunities lie in precision machining and integration, while alloy and magnet production represent larger strategic goals. To secure its strategic projects, India may need long-term purchase agreements and mechanisms to mitigate price volatility, alongside reliable demand estimates and supplier qualification processes for its defense sector.