Centre clears Rs 7,280 cr push to boost rare Earth magnet production, cut import dependence

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a Rs 7,280 crore scheme to boost the manufacturing of sintered Rare Earth Permanent Magnets (REPM) in India, a move aimed at significantly strengthening the country’s capabilities in one of the most strategically important segments of modern industry. These high-performance magnets are indispensable for electric vehicles, renewable energy systems, consumer electronics, medical devices, aerospace, and defence technologies. The new scheme is expected to accelerate domestic production, strengthen supply chain resilience, and support India’s long-term commitment to achieving Net Zero by 2070.

According to the government, this is a “first-of-its-kind” initiative designed to build a robust REPM ecosystem in the country. By promoting indigenous capabilities, the scheme seeks to enhance technological self-reliance and position India as a competitive global player in the advanced magnet supply chain. The effort also aligns with the broader vision of Viksit Bharat @2047, which emphasises sustainable industrial growth and reduced dependence on critical imports.

Under the scheme, India aims to establish domestic REPM manufacturing facilities with a cumulative output capacity of 6,000 metric tonnes per annum (MTPA). Capacity will be allocated to five selected beneficiaries through a global competitive bidding process, with each eligible for up to 1,200 MTPA. This structure is expected to attract global players, encourage competition among domestic manufacturers, and create an integrated and diversified production base.

Information and Broadcasting Minister Ashwini Vaishnaw highlighted the strategic significance of the initiative. “The scheme will promote the manufacturing of rare-earth permanent magnets. The aim is to create a capacity of 6,000 MTPA,” he said, noting that rare earth magnets form the “silent backbone” of several high-technology sectors. These magnets are especially critical for the rapidly expanding EV market, next-generation renewable technologies such as wind turbines, and various defence and aerospace applications.

The Rs 7,280 crore package includes Rs 6,450 crore in sales-linked incentives to be disbursed over five years and a capital subsidy of Rs 750 crore to support initial investments. The scheme will remain in force for seven years from the date of award — with the first two years serving as the gestation period for setting up facilities, followed by five years of incentive-linked production. This model is expected to attract substantial private investment, promote R&D and encourage adoption of cutting-edge manufacturing processes.

India’s current demand for REPMs is almost entirely met through imports, despite rapid growth across EVs, renewable energy, industrial automation and electronics. Demand is projected to double by 2030 compared to 2025 levels. By establishing domestic production capabilities, the government aims to cut import dependence, strengthen national security and foster employment in high-value manufacturing.

The scheme also covers the entire value chain — from rare earth oxides to metals, alloys and finished magnets — ensuring a fully integrated production ecosystem. This will help India secure critical supply chains, reduce external vulnerabilities and develop home-grown expertise in advanced material technologies, in line with the goals of Atmanirbhar Bharat.

Industry observers note that with this initiative, India is poised to join global leaders in REPM manufacturing. The combination of fiscal incentives, technology acquisition and capacity building is expected to equip Indian manufacturers to serve both domestic and export markets, ultimately contributing to a more resilient and competitive industrial landscape.