China's dominance in rare earths will end, India has made a move worth ₹7,000 crore!
The central government is expected to approve a major ₹7,000 crore (₹7 billion) scheme today to break China's monopoly on rare earths. This incentive scheme will ensure domestic supplies of minerals crucial for electric vehicles, solar panels, and the defense sector.
Rare earth minerals are the backbone of today's modern world. Your electric car, solar panels, and even vital defense equipment are impossible without them.
And China has been imposing its dominance on the entire world over these essential elements. According to a report in the Economic Times, the Union Cabinet may approve a major decision today to challenge this Chinese arbitrariness.
A new incentive scheme for rare earth permanent magnets is likely to be approved in today's Cabinet meeting. According to reports, the government plans to spend approximately ₹7,000 crore on this scheme.
This amount is significantly higher than the previously estimated ₹2,500 crore. This move will help India secure supplies of critical materials needed for electric vehicles (EVs), renewable energy, and defense production.
India took this big decision for this
In fact, China today produces 60 to 70% of the raw rare earths used globally and controls up to 90% of their processing. When China tightened export controls on these critical minerals in April, supply chains around the world were disrupted.
China has been using these minerals as a weapon amid its trade tensions with the United States. In July, Prime Minister Narendra Modi also clarified that critical minerals should not be "weaponized" and emphasized the need for a stable and diversified supply chain.
India also sources a large portion of its needs from China. According to government data, India imported 2,270 tonnes of rare earth metals and compounds in 2023-24, an increase of nearly 17% from a year earlier.
More than 65% of this supply came from China. Therefore, achieving self-sufficiency with a small plan of just ₹2,500 crore was difficult. India needed a significant investment to develop its supply chain, and this ₹7,000 crore plan is a major step in that direction.
India faces some big challenges
However, India faces some significant challenges in this area. The environmental risks associated with rare earth mining are a complex issue.
Furthermore, inadequate funding, a lack of technical expertise, and long project timelines have prevented commercial production from occurring without state support.
However, the government is not sitting idle. According to reports, several global suppliers are interested in meeting India's annual demand for approximately 2,000 tons of oxide.
Furthermore, the government is also preparing for the future. The Indian government is funding studies on synchronous reluctance motors. Once these motors are developed, India's dependence on rare earth minerals could be significantly reduced.