India pushes auto industry to rethink rare earths while building local supply
Tenders to make rare earth magnets likely to be issued within the next 2-3 months, says govt official
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Prefer us on GoogleLast Updated: Feb 16, 2026, 14:43 IST2 min
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The government is pressing automakers to redesign electric motors and other parts without rare earth magnets, even as it prepares a policy push to build domestic magnet-making capacity.
Rare earth permanent magnets are among the strongest types of permanent magnets and are critical to the automobile industry, especially electric vehicles.The developments come even as China has eased restrictions on exports to India, though with a caveat.
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“China has only eased restrictions on light rare earth magnets, which are being given to four companies in India. Heavy magnets are still fully restricted by China,” said a senior government official.
With some curbs still in place, the government is encouraging alternative technologies that either minimise or eliminate the use of rare earth magnets altogether.
“The automobile industry is exploring several alternative technologies, and we are encouraging them to use those,” the official said.
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Some of that shift is already visible. Most electric three-wheelers in India now use ferrite magnets, according to the official, an older technology that does not rely on rare earths.
Ferrite magnets are heavier and less efficient, but the trade-off is acceptable as it mitigates bigger risks.
Also Read: China’s rare earth restrictions drive innovation abroad
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Another technology being explored is synchronous motors—used by Tesla—that are magnet-less. This, however, is an expensive technology.
A third option that can be looked at is experimenting with ways to extract better performance from light rare earth magnets. “Heavy rare earths offer superior characteristics, but if you do adequate R&D, you can find ways to extract more from light magnets,” said the official.
“From low-tech products like three-wheelers to high-tech products like electric cars or a Tesla, people are going magnet-less.”
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The government’s push comes even as it plans to start domestic production of rare earth magnets, which officials expect to begin in about two years. Tenders are likely to be issued within the next two to three months, the official said, and several companies have already shown interest.
The Union Cabinet in November approved a Rs7,280 crore incentive programme to promote domestic manufacturing of sintered rare earth permanent magnets.
The first-of-its-kind scheme targets the creation of 6,000 metric tonnes per annum (MTPA) of integrated rare earth permanent magnet manufacturing, spanning the full value chain--from converting rare-earth oxides into metals, metals into alloys, and alloys into finished magnets.
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Complementing the initiative, the Union Budget for 2026-27 proposed the creation of dedicated rare-earth corridors across Odisha, Kerala, Andhra Pradesh and Tamil Nadu, aimed at accelerating mining, processing, research and manufacturing activity in the sector.
Automakers themselves are unlikely to manufacture magnets directly. Instead, the official expects joint ventures or consortiums with specialist magnetmakers. “The expertise lies with the magnetmakers,” the official said.
“Magnet-making doesn’t need huge capital. It needs technology, and that’s where China has the edge.”
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Despite a sizeable rare earth resource base, India remains at an early stage of permanent magnet manufacturing, relying heavily on imports—primarily from China—to meet domestic demand. Between 2022 and 2025, imports accounted for roughly 60- 80 percent of demand by value and 85-90 percent by volume. Demand for such magnets is expected to double by 2030.
First Published: Feb 16, 2026, 14:50
Subscribe NowHimani is an Associate Editor at Forbes India where she writes about startups shaking things up, legacy firms seeking fresh grounds, and sectors in the middle of big transformations. Always curious ab
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