India to Triple Rare-Earth Manufacturing Incentives

India plans to expand its incentive program for domestic rare-earth manufacturing to about $788 million, nearly triple the initial $290 million allocation, government sources say. The package, still pending approval, aims to build local refining and magnet production capacity to supply electric vehicles, renewable energy systems and defense applications.

The move follows heightened market tensions after Beijing imposed and later extended export controls on certain rare-earth elements earlier this year, citing national security. Those measures introduced stricter licensing and extraterritorial provisions that affected shipments tied to US defense and semiconductor sectors. After a recent meeting between US President Donald Trump and Chinese President Xi Jinping, China agreed to suspend the latest controls for one year in exchange for reciprocal US tariff and restriction reductions.

China currently dominates the rare-earth supply chain, accounting for over 90% of refining and about 98% of magnet production, according to the International Energy Agency and industry analysts. Separately, at least three Indian firms have received licenses to import Chinese rare-earth magnets under conditions that bar re-export to the US and prohibit defense uses. Officials say the expanded incentives are intended to secure critical materials and diversify global supply chains.