India's electric vehicle (EV) and chip manufacturing industries are poised to receive a significant boost following the government's approval of a ₹7,280 crore (approximately US$815.3 million) scheme to promote domestic manufacturing of rare earth permanent magnets (REPMs). This initiative aims to reduce India's reliance on imports, secure supply chains, and establish the country as a key player in the global REPM market.
Rare earth magnets are essential components in various sectors, including EVs, renewable energy systems, aerospace, defense, consumer electronics, and semiconductor manufacturing. They are used in electric motors, wind turbines, smartphones, and advanced electronics. India's consumption of REPMs is expected to double between 2025 and 2030, driven by the increasing demand for EVs and other applications. Currently, the country meets most of its REPM requirements through imports.
The approved scheme includes several key components designed to create a comprehensive REPM manufacturing ecosystem in India. The program has a total financial outlay of ₹7,280 crore, including sales-linked incentives worth ₹6,450 crore to be disbursed over five years and a capital subsidy of ₹750 crore for setting up facilities. The government plans to allocate capacity to five beneficiaries through a global competitive bidding process, with each eligible for up to 1,200 metric tonnes per annum (MTPA). The scheme will support the creation of integrated REPM manufacturing facilities, covering the entire value chain from rare earth oxides to metals, alloys, and finished magnets. The initiative is expected to establish 6,000 MTPA of REPM manufacturing capacity within India. Production is expected to commence within two to three years.
Industry leaders have welcomed the government's initiative, emphasizing its importance for strengthening supply chains and reducing import dependence. According to the government, by the completion of this program, India's import dependence for permanent magnets will practically reduce to zero, making the nation fully self-reliant in this strategic sector.
This move is also expected to have a positive impact on India's semiconductor and electronics manufacturing industries. REPMs are crucial for precision motors, automation systems, fab equipment, power electronics, EV traction systems, and 5G/AI hardware. By ensuring a secure supply of these materials, the initiative will act as a force multiplier for India's broader semiconductor manufacturing ambitions.
The government's decision to promote domestic REPM manufacturing aligns with India's self-reliance and climate goals. It is expected to accelerate the adoption of clean mobility solutions and support India's commitment to achieving net-zero emissions by 2070.
In recent months, there have been instances of China restricting rare earth magnet exports, which has caused concerns for Indian manufacturers. Some Indian companies have already started exploring plans to manufacture rare earth magnets in India. In November 2025, four Indian companies secured licenses to import rare-earth magnets from China, offering relief to the EV and automotive sectors. These licenses came with strict conditions, including prohibitions on re-export to the US or military applications.
