India’s rare earth push hits new roadblocks: China curbs key equipment exports; Rs 7,300 cr magnet plan at risk

India’s Rs 7,300 crore plan to boost domestic production of rare earth minerals and magnets could face serious setbacks after China tightened export controls on key machinery and materials used in their processing. The new restrictions threaten to slow India’s drive for self-reliance in producing components that are vital for electric vehicles, renewable energy, and high-tech industries.

China’s Bureau of Security and Control has expanded export curbs to include “centrifugal extraction equipment for rare earth processing” and “intelligent continuous impurity-removal and precipitation equipment for ionic rare earth ores.” Exporters of such machinery must now obtain special licences and declare whether the items have “dual-use” potential — civilian or military.


“China’s commerce ministry has issued a notification extending export controls also to rare earth production and processing equipment, and rare earth raw and auxiliary materials,” said a senior auto industry executive who did not wish to be named. “This may impact the new scheme the Centre has announced to incentivise local manufacturing of rare earth magnets,” the executive added, as quoted by ET.

Industry officials told ET that the new curbs cover essential extraction and refining equipment used in rare earth production. These materials are crucial for sectors such as electric vehicles, consumer electronics, wind energy, and heavy machinery. While some technology is available from countries like Germany and Japan, it is far more expensive than Chinese alternatives, they said.

Data from the International Energy Agency show that China accounts for 61% of global rare earth production and 92% of processing. This dominance leaves India heavily dependent on Chinese equipment and technology. “While the (Indian) government has been working on plans to attain self-sufficiency in rare earth magnet production, the challenge is the technology and the equipment are also controlled by China,” said another industry executive. “Sourcing equipment from Germany and Japan would shoot up costs and affect the viability of projects,” he added.

Earlier this month, the Expenditure Finance Committee approved the Centre’s Rs 7,300 crore incentive scheme to promote investment in rare earth magnet manufacturing. The plan allocates Rs 6,500 crore for capital expenditure and Rs 800 crore for operational support. It is expected to be placed before the Cabinet for final approval soon.

China’s latest move comes after an earlier round of restrictions imposed on April 4, covering medium and heavy rare earth items. That notification, issued amid trade tensions with the US, required exporters to obtain licences and end-user certificates confirming the materials would not be used in weapons or their delivery systems. Beijing said the controls were aimed at “safeguarding national security.”