India plans INR 1,500 crore incentive scheme for critical mineral recycling

• China restricts exports of rare earths, permanent magnets
• India holds vast rare earth reserves but lacks processing capacity

India is ramping up its efforts to secure critical mineral supply chains following China’s 4 April restrictions on exports of rare earths and permanent magnets – key inputs for electric vehicles, electronics, and defence. As per a top official, an INR 1,500 crore incentive scheme to recycle critical minerals is in its final stages.

China’s 4 April export controls: What you need to know

China’s Ministry of Commerce issued Announcement No. 18, imposing export licence requirements on key medium and heavy rare earths such as samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, including their oxides, alloys, compounds, and mixtures.

While not a blanket ban, the move tightens export control under national security and non-proliferation grounds.

India’s response: Key measures underway

1.INR 1,500 crore incentive scheme

The Ministry of Mines is finalising an INR 1,500 crore incentive scheme to support the recycling of minerals like neodymium, dysprosium, terbium, and samarium – vital for high-performance magnets used in clean-tech sectors. The move aims to reduce import dependence and strengthen domestic recycling infrastructure.

2. Regulatory overhaul underway

Amendments to the Mines and Minerals (Development and Regulation) Act (MMDR Act) will allow National Mineral Exploration Trust (NMET) funds to be used for overseas exploration. These changes align with the National Critical Mineral Mission (NCMM), which has a total outlay of INR 34,300 crore.

3. Domestic production imminent post MAM-NFTDC Tech tie-up

Domestic production of rare earth magnets is expected to commence within 3-4 months. Hyderabad-based Midwest Advanced Materials (MAM), backed by government funding, is in advanced talks with NFTDC to adopt indigenous technology for magnet processing.India is engaging with resource-rich nations – particularly in Central Asia – to jointly explore and secure mineral access. Integration of critical mineral clauses in trade agreements and the development of processing parks are also underway to support the ecosystem.

4. Automakers plan China trip to discuss export norms

China’s export curbs have triggered supply concerns among India’s auto and electronics manufacturers. A delegation of Indian automakers plans to visit China to ensure compliance with export norms. Meanwhile, India may temporarily waive import duties on specialised magnet-making equipment to fast-track local capacity.

Challenges remain

Despite holding the world’s fifth-largest rare earth reserves, India’s processing capacity is limited. Most resources are currently reserved for the atomic and defence sectors, with commercial supply chains still developing.

Outlook

India’s multi-pronged approach – combining regulatory reforms, financial incentives, R&D partnerships, and international collaborations – marks its most ambitious effort yet to insulate its industries from global supply shocks and build a resilient critical minerals ecosystem. The success of these initiatives will be crucial as global demand for green energy technologies, EVs, and advanced electronics continues to surge.