New Delhi: In a landmark decision to fortify India’s critical minerals ecosystem, the Union Cabinet chaired by Prime Minister Narendra Modi has greenlit a transformative ₹7,280 crore scheme dedicated to sintered rare earth permanent magnets (REPM) production. Dubbed the “Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets,” this pioneering initiative targets the establishment of 6,000 metric tonnes per annum (MTPA) of fully integrated manufacturing capacity, marking India’s bold entry into a sector long dominated by global giants.
Why Rare Earth Magnets Matter: Powering India’s Clean Energy Revolution
Rare earth permanent magnets represent the pinnacle of magnetic technology, crafted from specialized alloys of 17 rare earth elements—including the 15 lanthanides, scandium, and yttrium. These magnets boast unparalleled magnetic strength, elevated energy density, and resilience against corrosion, far surpassing traditional alternatives like ferrite magnets.
The sintering process—heating raw materials to extreme temperatures just below their melting point—unlocks these superior traits, creating compact yet immensely powerful components. In practical terms, REPMs are indispensable for high-efficiency electric motors, wind turbine generators, drone propulsion systems, satellite instrumentation, medical imaging devices, and advanced defense hardware.
India’s surging appetite for these magnets is fueled by explosive growth in electric vehicles (EVs), renewable energy installations, consumer electronics, aerospace innovations, and national security needs. Current annual consumption hovers between 4,000 and 5,000 tonnes, with projections indicating a doubling by 2030. Alarmingly, nearly 100% of this demand is currently satisfied through imports, exposing the nation to supply disruptions—exacerbated by recent Chinese export restrictions that have rattled global manufacturers, including Indian automakers.
Scheme Breakdown: Incentives, Timeline, and Capacity Allocation
At the heart of this strategic push is a meticulously structured financial framework designed to catalyze domestic production:
| Component | Allocation | Purpose |
| Sales-Linked Incentives | ₹6,450 crore | Disbursed over 5 years based on REPM sales |
| Capital Subsidy | ₹750 crore | Supports setup of 6,000 MTPA facilities |
| Total Outlay | ₹7,280 crore | Full integrated ecosystem development |
The scheme unfolds over a seven-year horizon from the award date: the initial two years serve as a gestation phase for constructing end-to-end facilities, followed by five years of performance-based incentive payouts tied directly to sales volumes.
Capacity distribution emphasizes competition and scale. The entire 6,000 MTPA will be divided among five selected beneficiaries via a transparent global competitive bidding process. Each winner can secure up to 1,200 MTPA, ensuring diversified participation. Eligible players span public and private sectors, with keen interest already expressed by firms in electronics, automobiles, and steel industries. Bidders hold the flexibility to choose plant locations, prioritizing efficiency and logistics.
What sets this apart is its emphasis on vertical integration. Supported facilities must encompass the full value chain: transforming rare earth oxides into pure metals, alloying those metals, and culminating in precision-finished REPMs. This closed-loop approach minimizes vulnerabilities, fosters technological mastery, and aligns with India’s National Critical Minerals Mission and Semiconductor Mission under a unified “whole-of-government” strategy.
Government Vision: From Import Dependence to Global Leadership
Union Minister of Information and Broadcasting and Electronics Ashwini Vaishnaw, during a post-Cabinet briefing on November 26, 2025, underscored the scheme’s geopolitical urgency. “This is a very important strategic decision,” he declared, likening it to the semiconductor mission’s blueprint. “It will create a completely integrated manufacturing ecosystem, making India self-reliant in rare earth magnet production within three to four years.”
Vaishnaw highlighted India’s rich endowment: 6.9 million tonnes of rare earth deposits, primarily in coastal placer formations, positioning the country among the world’s top three reserves. Yet, the true challenge lies not in raw ore abundance but in downstream capabilities—refining, separation, alloying, and magnet fabrication—where China commands over 85% of global market share.
Recent U.S.-China trade frictions have spotlighted rare earths as a chokepoint, prompting nations worldwide to diversify. India’s scheme arrives at a pivotal moment, just days after Commerce Minister Piyush Goyal flagged rare earth collaboration as a cornerstone in renewed India-Canada economic partnership talks.
Heavy Industries and Steel Minister H.D. Kumaraswamy elaborated on the subsidy mechanics, confirming the ₹750 crore capital aid for the five participants and ₹6,450 crore in sales incentives post-commissioning.
Environmental stewardship is non-negotiable. Vaishnaw assured adherence to the “highest environmental management standards,” with the sector primed to manage processing waste responsibly. This addresses longstanding concerns in rare earth extraction, blending ESG principles with industrial ambition.
Industry Cheers: Unlocking EVs, Jobs, and Energy Security
The announcement has ignited enthusiasm across stakeholder ecosystems. Shailesh Chandra, President of the Society of Indian Automobile Manufacturers (SIAM), hailed it as “a significant step toward building a resilient and stable supply chain” for electrified vehicles. He emphasized its role in accelerating clean mobility, slashing crude oil imports, curbing carbon emissions, and bolstering energy security—key enablers for India’s Net Zero 2070 pledge.
Vikrampati Singhania, President of the Automotive Component Manufacturers Association (ACMA), called it a “strategic and forward-looking intervention” targeting a “critical gap” in EV drivetrains, motors, sensors, and electronics. “This will reduce import dependence, infuse resilience into the automotive supply chain, spur investments in advanced materials, and cement India’s place in global EV and clean energy value chains,” Singhania stated.
Stephane Deblaise, CEO of Renault Group India, echoed this optimism: “Localizing rare earth magnets will boost growth for auto OEMs and component makers, fortify clean energy powertrains, deepen domestic value addition, and sharpen long-term competitiveness.”
Experts like Raju Kumar, Partner and Energy Tax Leader at EY India, view it as part of a “broader national commitment” to a secure critical minerals network. “It unlocks opportunities from mining to advanced materials, empowering Indian firms in electric mobility, renewables, electronics, and defense,” Kumar noted. Success, he cautioned, hinges on “disciplined implementation”—securing technology transfers, honing processing skills, enforcing sustainable mining, and upholding ESG norms.
Anupam Kumar, Co-founder and CEO of battery recycling firm MiniMines, pinpointed historical gaps: India once possessed these competencies in the 1990s but lost ground. “This revives them, accelerates innovation, attracts recycling investments, and empowers homegrown clean-tech ventures,” he said.
Mrunali Tembhurne, Associate Fellow at The Energy and Resources Institute (TERI), contextualized global shifts: Chinese export controls recently triggered shortages for Indian EV makers. While rare earth-free alternatives like ferrite motors emerge, REPMs remain irreplaceable short-to-medium term across sectors.
Broader Impact: Jobs, Viksit Bharat, and Global Competitiveness
Beyond immediate supply stability, the scheme promises ripple effects. It will spawn thousands of high-skill jobs in manufacturing, R&D, and ancillary services, while drawing foreign direct investment and nurturing startups. By 2030, as REPM demand surges, India could evolve from importer to exporter, enhancing technological sovereignty and contributing to the Viksit Bharat@2047 vision.
This initiative dovetails with parallel efforts: a Pune firm recently decoding rare earth processing, beach-sand mining revivals, and critical minerals diplomacy. Together, they fortify India’s hand in an era where supply chain control equals strategic power.
Looking Ahead: Execution is Key
As global bidding commences, all eyes are on swift awards and groundbreaking. If navigated adeptly, this REPM scheme could redefine India’s role in the $20 billion-plus rare earth magnet industry, shielding against geopolitical whims and fueling a sustainable future.
FAQs
1. What is the Union Cabinet’s new rare earth magnets scheme, and why was it launched?
The “Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPMs)” is a ₹7,280 crore initiative approved on November 26, 2025, to build 6,000 MTPA of integrated REPM production in India. It addresses 100% import dependence amid China’s export curbs, powering EVs, renewables, defense, and electronics with self-reliant supply chains.
2. How are the incentives structured under the REPM manufacturing scheme?
Capital Subsidy: ₹750 crore for setting up facilities.
Sales-Linked Incentives: ₹6,450 crore disbursed over 5 years based on REPM sales. Total outlay supports 5 beneficiaries (up to 1,200 MTPA each) via global bidding, with a 7-year timeline: 2 years for plant setup + 5 years for incentives.
3. What makes rare earth permanent magnets (REPMs) so critical for India?
REPMs, made via sintering alloys of 17 rare earth elements, offer unmatched strength and energy density for EV motors, wind turbines, drones, satellites, and defense tech. India’s demand (4,000-5,000 tonnes/year) is set to double by 2030—currently all imported—making domestic production vital for Net Zero 2070 and energy security.
4. How will India select manufacturers and ensure end-to-end integration?
Capacity is allocated to 5 winners through transparent global competitive bidding (public/private eligible). Facilities must cover the full chain: rare earth oxides → metals → alloys → finished magnets. Companies from auto, electronics, and steel sectors have shown interest; locations are bidder-chosen.
5. What are the expected impacts of this rare earth magnets initiative?
It promises job creation, FDI influx, reduced oil imports, lower emissions, and global competitiveness. Industry leaders (SIAM, ACMA, Renault) praise it for EV supply chain resilience. With India’s 6.9 million tonne reserves, execution could make India a top REPM player in 3-4 years, aligning with Critical Minerals Mission.
