Government Approves ₹7,280 Crore Scheme to Boost Domestic Production of Rare Earth Magnets
Despite having the world’s fifth-largest reserves of rare minerals, India imports nearly all of the 900 tonnes of magnets used annually. To address this, the Central Government approved a ₹7,280 crore scheme to promote domestic manufacturing of rare earth permanent magnets. The decision was taken during a Cabinet meeting chaired by Prime Minister Narendra Modi.
This initiative marks India’s first move toward building an integrated domestic supply chain for critical minerals.
Objective of the Scheme
The program aims to develop the capacity to produce 6,000 tonnes of rare earth permanent magnets annually to meet rising demand in sectors like:
- Electric vehicles (EVs)
- Renewable energy
- Electronics
- Aerospace
- Defence
This will strengthen domestic manufacturing competitiveness and accelerate clean energy adoption.
Plan Structure and Incentives
Under the scheme, five beneficiaries will be selected through a global competitive bidding process, each eligible for production capacity of 1,200 tonnes per year.
The scheme includes:
- ₹6,450 crore in sales-linked incentives over five years
- ₹750 crore as capital subsidy for setting up manufacturing units
The scheme will operate for seven years from the date of allocation—two years for setting up units and five years for incentive disbursal.
India’s Current Dependence on Imports
India is heavily dependent on imports for rare earth permanent magnets—the strongest type of permanent magnets used in high-tech applications. Despite vast mineral reserves, India imports nearly 100% of its 900-ton annual requirement.
Due to the rising demand from EVs, renewable energy, and industrial electronics, domestic consumption of rare earth magnets is expected to double between 2025 and 2030.
Expected Benefits
According to an official statement, the initiative will help India establish its first integrated rare earth permanent magnet manufacturing units, fostering:
- Job creation
- Stronger self-reliance
- Progress toward net-zero emissions by 2070
The scheme also aims to position India as a major global player in the rare earth magnet market.
Industry Reactions
The integrated manufacturing units will convert rare earth oxides into metals, then alloys, and finally finished permanent magnets.
SIAM President Shailesh Chandra appreciated the initiative, calling it crucial for building a resilient supply chain for EV components.
He added that the scheme would accelerate clean mobility adoption, reduce carbon emissions, and decrease dependence on crude oil imports.
ACMA President Vikramapati Singhania said the scheme reflects strategic and forward-thinking policy, bridging critical gaps in India's EV and mobility ecosystem.
Experts believe the incentives signal India’s intent to build a competitive critical minerals ecosystem.
EY India Partner and Energy Tax Leader Raju Kumar stated that support for magnet manufacturing could unlock new opportunities in mining, processing, alloy production, and advanced metallurgy. However, he emphasized that real success depends on proper implementation.