Cabinet clears ₹7,280-crore scheme to boost rare earth magnet manufacturing

The Union Cabinet on Wednesday approved a ₹7,280-crore scheme to promote domestic manufacturing of sintered rare earth permanent magnets (REPM), a critical component used in electric vehicles, renewable energy systems and defence equipment.

The “Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets” seeks to establish 6,000 metric tonnes per year of integrated manufacturing capacity.

"The scheme will promote manufacturing of rare earth permanent magnets. The aim is to create capacity of 6,000 MTPA (metric tonne per annum)," Information and Broadcasting Minister Ashwini Vaishnaw told reporters.

India currently imports most of its rare earth magnets, which are critical components in motors, turbines, electronics and aerospace systems.

Describing it as a first-of-its-kind initiative, the government said the scheme is expected to strengthen self-reliance, reduce import dependence, build supply chain resilience and position India as a significant player in the global magnet market.

REPMs, among the strongest known permanent magnets, are widely used in automotive, aerospace, electronics and industrial applications.

India’s consumption of REPMs is projected to double between 2025 and 2030, and is currently met largely through imports, the government said.

The financial outlay includes ₹6,450 crore in sales-linked incentives for five years and ₹750 crore as capital subsidy to set up manufacturing facilities.

The scheme envisions allocation of the proposed capacity to five beneficiaries through a global competitive bidding process, with each allotted up to 1,200 MTPA.

The scheme will run for seven years from the date of award, including a two-year gestation period for setting up facilities and five years of incentive disbursal.