Centre notifies ₹7,280-crore scheme to make rare earth magnets in India; how it works

The scheme aims to establish 6,000 metric tonnes per annum (MTPA) of integrated manufacturing capacity and reduce India’s dependence on China for critical inputs, while securing supply chains for EVs, aerospace, electronics and green energy sectors.

According to a notification issued by the Ministry of Heavy Industries, the initiative seeks to build a complete domestic value chain of converting rare earth oxide into sintered Neodymium-Iron-Boron (NdFeB), considered the strongest type of permanent magnets and essential for strategic and industrial applications.

“Through this scheme, the Government of India intends to incentivise setting up of 6,000 MTPA (Million Tonnes Per Annum) of integrated REO (rare earth oxides) to sintered NdFeB REPM's manufacturing facilities in the country,” the ministry said.

India currently imports almost its entire requirement of sintered NdFeB magnets, which are used in motors, turbines, electronics and aerospace systems.

While the country has upstream capabilities in mining, separation and oxide refining, it lacks industrial-scale midstream capacity for converting oxides into metals, alloys and finished magnets.

Under the scheme, indigenously produced sintered NdFeB magnets made from neodymium-praseodymium (NdPr) oxide will be eligible for sales-linked incentives as well as capital subsidy.

The government will allocate up to 6,000 MTPA of integrated sintered NdFeB magnet manufacturing capacity to five applicants through a transparent global tender enquiry process by issuing a request for proposal (RFP).

The minimum allocation to a beneficiary will be 600 MTPA, extendable up to a maximum of 1,200 MTPA in multiples of 100 MTPA, the notification said.

The beneficiaries will receive sales-linked incentives on the sale of sintered NdFeB REPM and a capital subsidy for setting up the allocated manufacturing capacity.

Three selected beneficiaries with the lowest bids will receive an assured limited supply of NdPr oxide from IREL (India) Ltd, a central public sector enterprise under the Department of Atomic Energy.

The total duration of the scheme is seven years, including a two-year gestation period for setting up manufacturing facilities and five years for incentive disbursement based on sales.

If commercial production begins before the completion of the gestation period, the additional period will also be eligible for sales-linked incentives over and above the five-year incentive window.

India has one of the world’s largest rare earth reserves, largely located in coastal regions. IREL (India) Ltd is currently the only company in the country engaged in mining rare earth ores and refining them into rare earth oxides.