Key Points:
- Rare Earth Permanent Magnets scheme approved with ₹7,280 crore to boost domestic production and reduce import dependence.
- Government offers ₹6,450 crore in sales-linked incentives and ₹750 crore capital support over seven years.
- Initiative supports EVs, renewable energy, defence, and electronics while creating jobs and strengthening supply chains.
New Delhi – The Union Cabinet on Wednesday approved the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPMs) with a financial outlay of ₹7,280 crore. The initiative aims to develop 6,000 metric tonnes per annum (mtpa) of integrated REPM capacity in India, reducing dependence on imports and strengthening the country’s critical minerals supply chain.
Rare Earth Permanent Magnets are among the strongest permanent magnets and are essential for electric vehicles, renewable energy systems, electronics, aerospace, and defence applications. The scheme will support fully integrated manufacturing, covering conversion of rare earth oxides to metals, alloy processing, and production of finished magnets.
Scheme provides sales-linked incentives and capital support
The government will offer ₹6,450 crore in sales-linked incentives over five years, along with a ₹750 crore capital subsidy to establish facilities with a total capacity of 6,000 mtpa. A global competitive bidding process will select five beneficiaries, each eligible to produce up to 1,200 mtpa. All approved facilities must integrate the full value chain from raw materials to finished Rare Earth Permanent Magnets.
The plan will span seven years, including a two-year gestation period for project setup, followed by five years of incentive disbursal.
Strategic goals focus on self-reliance and job creation
The government said the initiative supports the Atmanirbhar Bharat Abhiyan and India’s Net Zero 2070 commitment. Domestic REPM production is expected to generate employment, strengthen supply chains, and promote a globally competitive manufacturing base under Viksit Bharat @2047.
China dominates the global rare earths market, producing 68.6 per cent of worldwide output. Export restrictions and periodic supply slowdowns have caused Indian companies to face long delays in securing licences. Supply chain risks were highlighted during the 2020 pandemic, when dependence on a single country disrupted access to critical materials.
India expands rare earth exploration and production
India holds 6.27 per cent of global rare earth reserves but accounts for only 0.83 per cent of global production, according to an Ernst & Young report. To increase output, the government launched the National Critical Mineral Mission. Under this programme, the Geological Survey of India will undertake 1,200 exploration projects between fiscal year 2025 and 2031.
The Atomic Minerals Directorate is surveying coastal and river sands for new deposits. Meanwhile, state-run IREL Limited has been tasked with producing high-purity rare earth oxides from monazite, aiming to reduce import dependence.
The Cabinet’s approval of the Rare Earth Permanent Magnets scheme marks a significant step in India’s efforts to secure a domestic supply of strategically vital materials and support long-term growth in clean energy, defence, and technology sectors.
