The Union Cabinet has given the green light to a new plan aimed at enhancing the production of sintered rare earth permanent magnets (REPMs), a critical component in electric vehicles (EVs), renewable energy, and defense sectors. This decision comes amidst China’s stricter export regulations on rare earth magnet materials, which are expected to pose supply challenges for Indian industries.
The government has allocated Rs 7,280 crore to establish a fully integrated REPM manufacturing capacity of 6,000 metric tonnes per year in India. This initiative will cover the entire manufacturing process—from converting rare earth oxides into metals, producing alloys, to manufacturing finished magnets.
Currently, India heavily relies on imports to meet its REPM requirements. With the demand projected to double by 2030, the new program aims to ensure a stable supply chain and foster a robust domestic ecosystem.
Raju Kumar, Partner and Energy Tax Leader at EY India, emphasized that the incentives for rare-earth magnets and the allocations in the National Critical Minerals Mission underscore India’s commitment to establishing a secure and competitive critical-minerals ecosystem. The support for magnet manufacturing, a sector where India traditionally depended on global supply chains, can open up opportunities in mining, processing, alloying, and advanced materials, allowing Indian companies to partake in high-value applications across various industries.
Kumar stressed the importance of disciplined implementation, including access to technology, high-quality processing capability, responsible mining practices, and adherence to ESG (Environmental, Social, and Governance) standards. If executed effectively, this initiative could fortify India’s long-term energy transition and enhance its manufacturing competitiveness.
Under the scheme, Rs 6,450 crore will be allocated as sales-linked incentives over five years, with an additional Rs 750 crore as a capital subsidy for establishing facilities. The government intends to allocate capacity to five manufacturers through a global bidding process, with each manufacturer permitted up to 1,200 MTPA.
The program is set to operate for seven years, comprising a two-year setup phase for the plants and a five-year period for incentive disbursements.
REPMs are vital magnets used globally in EV motors, wind turbines, drones, satellites, and medical devices. By developing domestic production capabilities, India aims to reduce import reliance, bolster supply chains, and align with its Net Zero 2070 objectives.
The government anticipates that this move will contribute to establishing a technologically advanced and internationally competitive manufacturing sector, aligning with the broader vision of Viksit Bharat by 2047. This significant initiative is expected to generate employment opportunities, attract investments, and position India as a key player in the global rare earth magnet market.