In a move poised to significantly bolster India's self-reliance in critical technologies, the Union Cabinet has approved a ₹7,280-crore scheme to promote domestic manufacturing of rare earth permanent magnets (REPM). This initiative, a first of its kind, aims to establish an integrated Rare Earth Permanent Magnet manufacturing capacity of 6,000 Metric Tons per Annum (MTPA) within India.
The scheme, formally titled the 'Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets,' was approved during a Cabinet meeting chaired by Prime Minister Narendra Modi. Information and Broadcasting Minister Ashwini Vaishnaw highlighted the strategic importance of this decision. The initiative is designed to reduce India's reliance on imports, particularly from China, and strengthen the supply chain for advanced manufacturing sectors.
The total financial outlay of ₹7,280 crore includes sales-linked incentives of ₹6,450 crore on REPM sales over five years and a capital subsidy of ₹750 crore for establishing the 6,000 MTPA of REPM manufacturing facilities. The scheme will run for seven years, including a two-year gestation period for setting up integrated REPM manufacturing facilities and five years for incentive disbursement on sales.
Rare earth permanent magnets are essential components in various high-tech applications, including electric vehicles (EVs), renewable energy systems like wind turbines, electronics, aerospace, and defense equipment. The demand for REPMs in India is projected to double between 2025 and 2030, driven by the increasing adoption of EVs, renewable energy, and growing industrial and consumer electronics sectors. Currently, India heavily relies on imports to meet its REPM demand.
The government plans to allocate the total capacity to a maximum of five beneficiaries through a global competitive bidding process, with each eligible for up to 1,200 MTPA. The scheme will support the creation of fully integrated REPM manufacturing facilities, encompassing the conversion of rare earth oxides to metals, metals to alloys, and alloys to finished REPMs. This integrated approach is expected to enhance domestic capabilities across the entire value chain.
This initiative aligns with the government's broader agenda of securing critical mineral supply chains and enhancing technological self-reliance across sunrise sectors. By promoting domestic manufacturing of REPMs, India aims to reduce import dependence, attract investment, enhance technological capabilities, and create employment opportunities in high-tech manufacturing. The scheme is also expected to support India's goal of achieving Net Zero emissions by 2070.
