Cabinet Approves Rs 7,280 Cr. for Rare Earth Magnet Manufacturing
Union Cabinet has approved Rs. 7,280 crore financial outlay for ‘Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets’. This is a first of its kind initiative that aims to establish manufacturing of Rare Earth Permanent Magnets (REPM) in India and decrease dependence on foreign imports.
Rare Earth Magnets Production to Address Growing Demands from Various Segments
As per a recent PIB press release, there is a robust growth in REPM demand from electric vehicles, renewable energy, industrial applications, and consumer electronics industry segments. Looking at the growth in demand, India’s REPM consumption is expected to double to about 15,000 Tonne by 2030 in comparison to 2025.
REPMs are essential for various segments, including electric vehicles, renewable energy, electronics, aerospace, and defence applications. This scheme will be designed to produce 6,000 Metric Tons Per Annum (MTPA) of REPMs to meet it’s growing demand.
Additionally, the scheme will also involve conversion of rare earth oxides metals, metals to alloys, and alloys to finished REPMs by creating integrated REPM manufacturing facilities.
Structure for Schemes Duration & Financial Outlay
Union Cabinet’s approved Financial Outlay of Rs. 7,280 crore comprises Rs. 6,450 crore of sales-linked incentives on REPM sales for a duration five years. This outlay also includes Rs. 750 crore capital subsidy to set up REPM manufacturing facilities with a cumulative capacity of 6,000 MTPA . This total capacity of 6,000 MTPA will be allocated to five beneficiaries via a bidding process, where each beneficiary will be allotted up to 1,200 MTPA of REPM production capacity.
Duration of this scheme will be 7 years from the date of award; out of which 2 years will be for the development of integrated REPM manufacturing facilities, and the remaining 5 years will be for incentive disbursement on REPMs sales.
Rare Earth Magnets Production to Decrease Dependence on Foreign Imports
Currently, India imports about 100% of its rare earth magnet demand. A PIB release dated 1st August, 2025 cites the disruption in supply of rare earth magnets and India’s dependence on China and rest of the world for rare earth elements. It mentions that India depends on China for supply of Permanent Magnets and raw materials for rare-earth permanent magnet production. Out of this raw materials to become REPM, India’s dependence on China for rare-earth metals is 84.8%, and for other materials used to make rare-earth magnets is 90.4%.
Following Union Cabinet’s approval on 29th January, 2025, National Critical Mineral Mission has been set up and it aims to remedy future disruptions in the supply of rare earth magnets by increasing domestic capacity and build supply chain resilience for critical minerals, which include Rare Earth Elements. Also, Ministry of Mines is funding Rare Earth Elements-related R&D projects, a total of 11 Rare Earth Elements-related projects were approved for a total outlay of Rs. 9.33 crore during 2023-2024 and 2024-2025.
