Centre greenlights ₹7,280-crore plan to accelerate India’s rare earth magnet production drive

India took an important step towards strengthening its manufacturing sector after the Union Cabinet approved a Rs 7,280 crore scheme dedicated to producing rare earth permanent magnets. The decision was made during a Cabinet meeting chaired by Prime Minister Narendra Modi on Wednesday. This approval was seen as a major push for India to reduce its dependence on imports and build its own strong supply chain in rare earth magnet production.

The new initiative, called the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets, was introduced to help India become a key participant in the global market for rare earth permanent magnets, commonly known as REPMs. These magnets are essential components in several modern and fast-growing industries. At present, India depends almost completely on imported magnets to meet domestic demand. With this new scheme, the government aims to build the country’s first-ever integrated manufacturing ecosystem for REPMs.

Rare earth magnets play a crucial role in multiple industries because of their strong magnetic properties and long-term reliability. They are used in electric vehicles, aerospace equipment, consumer electronics, medical devices, and defence systems. As these sectors continue to grow, global demand for rare earth magnets is rising every year. India’s move to set up a domestic manufacturing base is expected to support local industry, reduce costs, and strengthen national security by limiting dependence on foreign suppliers.

How the scheme will work and who will benefit

Information and Broadcasting Minister Ashwini Vaishnaw explained the details of the scheme while speaking to reporters. He said the government planned to create an overall manufacturing capacity of 6,000 metric tonnes per annum (MTPA) through this initiative. This entire capacity would be divided among five beneficiaries who would be selected through a global competitive bidding process. To ensure fairness and equal opportunity, each selected company would receive up to 1,200 MTPA of approved manufacturing capacity.

The scheme has been designed to run for a total of seven years. The first two years would be considered the gestation period, during which companies would set up their integrated rare earth magnet production facilities. These facilities would include all steps of production, from raw material processing to finished magnet assembly. Once the facilities become operational, the government would provide incentives for five years based on sales of REPMs.

The financial structure of the scheme has also been carefully planned. Out of the total allocation of Rs 7,280 crore, an amount of Rs 6,450 crore has been reserved for sales-linked incentives. This money would be disbursed over the five-year incentive period to the selected companies. Apart from this, the government would provide a capital subsidy of Rs 750 crore to support the establishment of the REPM manufacturing infrastructure required to achieve the targeted capacity.

According to officials, this combination of incentives and capital support is expected to attract major domestic and international companies to invest in India’s magnet manufacturing sector. It is also expected to encourage research, innovation, and technology development related to rare earth elements in the country.

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A major step toward self-reliance and green goals

Currently, all of India’s rare earth magnet requirements are met through imports. This heavy dependence has created challenges, particularly in sectors such as electric mobility and defence, where supply chain stability is crucial. With the approval of this scheme, India will now begin building its first integrated REPM manufacturing facilities, which will help the country reduce dependence on imports and become more self-sufficient.

Establishing this industry within the country will also generate new employment opportunities. Skilled engineers, technicians, researchers, and workers will be required across various stages of production. This will lead to the creation of a specialised workforce capable of contributing to the growth of advanced manufacturing in India.

Moreover, rare earth magnets are a key component in clean energy technologies, particularly in electric vehicles and wind energy systems. By increasing domestic production, India aims to support its climate commitments, especially its target of achieving Net Zero emissions by 2070. Local manufacturing will also lower the carbon footprint associated with importing magnets from other countries.

Officials believe that the new scheme will significantly boost India’s position in the global clean technology supply chain. With increasing global competition for rare earth resources, India’s move to establish its own production ecosystem is considered timely and strategic. The scheme aligns with the country’s long-term goals of economic growth, technological advancement, and environmental sustainability.

Overall, the Cabinet’s approval reflects the government’s focus on strengthening critical manufacturing sectors and reducing vulnerability to global supply chain disruptions. When fully implemented, the new rare earth magnet manufacturing scheme is expected to transform India into a competitive and reliable producer in this high-value industry, supporting both domestic needs and future export potential.