Centre clears Rs 7,280 crore plan to build rare-earth magnet manufacturing in India
New Delhi: The Union government on Wednesday cleared a new policy aimed at building domestic capability in one of the world’s most strategically significant material sectors. The Cabinet, chaired by Prime Minister Narendra Modi, approved a Rs 7,280 crore scheme intended to support the manufacturing of sintered rare earth permanent magnets in India, with an expected installed capacity of 6,000 metric tonnes per annum. Officials said the initiative is designed to reduce the country’s reliance on imports, particularly from China, which currently dominates the global supply chain.
Announcing the approval, Information and Broadcasting Minister Ashwini Vaishnaw said the plan will involve the establishment of integrated facilities spanning the entire production chain. “The scheme will promote manufacturing of rare earth permanent magnets. The aim is to create capacity of 6,000 MTPA,” the minister told reporters. He added that detailed operational guidelines would be issued shortly. Under the model approved, five beneficiaries will be chosen through a global competitive bidding process, with each allotted up to 1,200 MTPA of production capacity.
The initiative, formally named the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets, will run for seven years from the date of award. The period includes two years for establishing full-scale magnet manufacturing units and five years during which beneficiaries will receive incentives linked to sales. Of the total financial outlay, Rs 6,450 crore has been set aside for sales-linked incentives, while capital subsidies amounting to Rs 750 crore will support the creation of production capacity.
Rare earth magnets are essential inputs for a range of high-technology industries, including electric vehicles, wind turbines, smartphones, aerospace manufacturing, defence electronics, and power generation. These magnets are valued for generating significantly stronger magnetic fields than ferrite or alnico magnets, enabling compact, high-efficiency components in motors, drives, speakers, hard disks, sensors, and actuators. Curved-blade wind turbines rely on them to convert rotational energy into electricity, while automotive systems such as electric power steering, window lift motors, and starter-generators also use them extensively.
An official statement described the scheme as a step toward developing a self-sustaining ecosystem for rare earth magnet production. It said the plan is expected to establish India’s first integrated REPM manufacturing units, build domestic supply security for vital sectors, and support job creation. The note added that the scheme would help strengthen Indian industry’s competitiveness in international markets and promote the transition toward electric mobility and renewable power systems.
Industry data suggests demand for rare earth magnets in India is likely to increase sharply over the next few years. India currently requires between 4,000 and 5,000 MTPA, but consumption is forecast to double by 2030 compared to 2025, driven by the expansion of EV manufacturing, rising renewable energy production, increasing electronics penetration, and large-scale industrial automation. Most of this requirement is presently met through imports. “With this initiative, India will establish its first-ever integrated REPM manufacturing facilities, generating employment, strengthening self-reliance,” the official statement said.
Global supply conditions have added urgency to India’s plans. China accounts for more than 90 per cent of global rare earth processing and magnet manufacturing. This dominance has periodically created supply bottlenecks and cost instability for industries dependent on magnet imports. Since April 4, China has required export licences for seven types of rare earth elements and derivative products, which industry observers say has constrained availability in sectors including automobiles and electronics.
Vaishnaw stated that India could explore cooperation with other resource-holding nations. “India’s requirements for permanent magnets are constantly increasing. India can look at collaborating with countries including Australia and Japan for this,” he said. He added that both public and private sector companies would be able to participate in the scheme, with selections made “through a transparent mechanism.” When asked about reports that some countries were scaling back rare earth manufacturing, he responded that the sector remains strategically important and noted “we have to be present” because rare earths have become a critical negotiation factor in global supply chains.
India holds considerable untapped geological potential. Official estimates indicate reserves of about 8.5 million tonnes of rare-earth oxides, mostly concentrated in monazite-bearing coastal and inland sand deposits. Independent assessments place the figure between 6.9 and 7.2 million tonnes, ranking India among the top three countries globally by reserve size. Deposits have been identified in Tamil Nadu, Kerala, Andhra Pradesh, Odisha, West Bengal, Jharkhand, Gujarat, and Maharashtra. Hard-rock rare earth sites have also been surveyed in Rajasthan and Gujarat.
Despite abundant resources, India currently contributes less than one per cent of global rare earth mining and processing. The deposits remain underexploited due to technological, economic, and market constraints. The government has therefore initiated a mission on critical minerals to expand exploration, processing, extraction, and value-added manufacturing. The aim is to strengthen domestic production, reduce vulnerability to supply disruptions, and position India as a potential global supplier of these minerals. Rare earth permanent magnets sit at the centre of emerging industrial transformation. They are core elements in modern traction motors for electric vehicles, compact motors used in domestic appliances, magnetic levitation systems for precision control, and actuators that drive advanced robotics. They also have extensive applications in defence platforms, including guidance systems and missile control. As industries move toward miniaturisation, magnet-based components continue to replace bulkier electromagnetic counterparts.
However, developing a competitive supply chain poses challenges. Mining, processing, oxide conversion, alloying, and magnet fabrication involve complex separation technology, large infrastructure investment, and strict environmental compliance. International markets have been subject to price swings caused by policy changes, production quotas, and shifts in export controls. The new scheme seeks to address such barriers by establishing manufacturing capability from ore to final magnet. India’s push comes at a time when rare earths have become a focal point of geopolitical contest. These critical minerals underpin decarbonisation, digitalisation, and energy security strategies worldwide. Several countries have accelerated efforts to diversify supply from China, including setting up mining and refining lines in Australia, United States, and Europe. India, with its reserves and expanding industrial demand, stands positioned to scale capacity through government-industry partnerships and global collaboration.
The Cabinet approval signals the beginning of what policymakers describe as a long-term strategic build-out. With eligibility norms expected soon, companies from multiple sectors are anticipated to show interest. Officials noted that the establishment of integrated processing and magnet manufacturing facilities could help secure the raw material chain needed for next-generation mobility and renewable energy expansion.
The seven-year scheme will now move toward the implementation stage. Once bids are submitted and beneficiaries chosen, the construction of facilities is expected to commence, with incentives disbursed upon production and sale. The government maintains that the programme will reduce import dependency, deepen domestic value addition, and provide industries with a stable supply of high-performance magnets.