India approves Rs 7,200 crore push to build rare earth magnet manufacturing base; heres why its important
India has approved a Rs 7,200 crore scheme to build integrated rare earth permanent magnet manufacturing facilities, aiming to reduce import dependence, develop a full domestic value chain, support electric mobility, boost renewable energy growth and strengthen long term industrial self sufficiency.
New Delhi: India has moved to strengthen its rare earth industrial capabilities with the Union Cabinet approving a Rare Earth Permanent Magnets Scheme worth more than Rs 7,200 crore. The initiative represents a strategic push to reduce reliance on imports, expand domestic manufacturing and position India as a competitive player in the global market for advanced materials essential to future technologies.
The government aims to create integrated facilities capable of producing 6,000 metric tonnes of rare earth permanent magnets annually. These magnets are crucial for electric vehicles, renewable energy systems, electronics, aerospace manufacturing and defence applications. Despite possessing significant rare earth reserves, India has remained dependent on imports, mainly from China, for specialised magnet production.
The scheme intends to change this by establishing India’s first end to end manufacturing ecosystem for these critical components.
A substantial financial package underpins the scheme. The government has allocated Rs 6,450 crore as sales linked incentives over five years, alongside Rs 750 crore in capital subsidy for establishing production units. Five units of 1,200 MTPA each will be developed to collectively reach the national capacity target of 6,000 MTPA.
Key highlights of Rare Earth Permanent Magnets Scheme
- Total investment approved: over Rs 7,200 crore
- Production target: 6,000 MTPA of rare earth permanent magnets
- Five manufacturing units of 1,200 MTPA each to be established
- Rs 6,450 crore allocated for sales linked incentives
- Rs 750 crore allocated as capital subsidy
- Complete value chain planned: oxides to metals, metals to alloys, alloys to finished magnets
- Scheme duration: 7 years, including 2 years for setting up facilities
- Expected doubling of India’s REPM demand by 2030
- Intended to strengthen EV, renewable energy, defence and electronics sectors
Developing full rare earth magnet value chain within India
A defining feature of the scheme is its focus on developing the full rare earth magnet value chain within India. Manufacturing facilities will be required to manage every production stage, from converting rare earth oxides into metals, processing them into specialised alloys and finally producing finished magnets suited for industrial applications. This approach aims to reduce vulnerability to global supply disruptions while elevating domestic technological capability.
The scheme will run for seven years. The initial two year period will allow for the establishment of integrated manufacturing facilities, followed by a five year window for incentive disbursement. India anticipates a significant rise in rare earth magnet consumption by 2030, driven by accelerated adoption of electric mobility, expansion of renewable energy infrastructure, industrial automation and increasing demand for advanced consumer electronics.
By securing domestic production of a strategically important material, the initiative supports national industrial resilience, reduces import dependence and aligns with India’s long term commitment to reach Net Zero emissions by 2070.
The magnets produced under this scheme are expected to play a vital role in clean energy and next generation industrial technologies.