New Delhi is introducing a $156 million-subsidy to assist domestic producers of the crucial component for the high-technology industry

India is looking to manufacture rare earth magnets. A $156 million subsidy scheme has been introduced to domestic producers, the website Moneycontrol said on Friday.

The South Asian nation possesses the world's third-largest reserves of rare earths, but less than 20% has been explored so far. 

"It is proposed that there will be two manufacturers as of now, but this could change by the time the scheme is ready," India's Minister of Heavy Industries and Steel H.D.Kumaraswamy has said, according to the website.

An official at the ministry said the subsidy will be available to manufacturers that undertake end-to-end processing, from rare earth oxides to magnets.

The proposed scheme aims to support both private companies and public sector enterprises by providing incentives to establish domestic capacity across the entire value chain. 

India Rare Earth Limited, a government-backed company, is set to play a crucial role by providing about 500 tons of rare earth raw materials to original equipment manufacturers involved in magnet production, the Moneycontrol report said. 

Billionaire Anil Agarwal's Vedanta Group, JSW Group and EV parts maker Sona BLW Precision Forgings Ltd. are among those who have expressed an interest in this initiative, according to a report by Bloomberg. 

New Delhi has stepped up its efforts to make the magnets that are used in electric vehicles, generators and hard drives, after Beijing announced export restrictions in April. China presently dominates the global market, accounting for around 60% of the world's supply of rare earth magnets.

Under China's revised rules, its exporters are required to secure licenses and submit end-use declarations that confirm that materials will not be used in the defense industry or get re-exported to the US. 

Indian industry experts have called on the government to support the manufacturing of the component, which is also crucial for the renewable energy sector.

In the 2024-25 fiscal year, the South Asian nation imported 53,748 tons of rare earth magnets, according to the Economic Times.