India Launches INR7,280 Crore Rare Earth Permanent Magnet Manufacturing Scheme

On November 26, 2025, India’s Union Cabinet approved a INR7,280 crore ($815 million) scheme aimed at establishing the country’s first integrated manufacturing ecosystem for Rare Earth Permanent Magnets (REPMs). This initiative is designed to significantly reduce India's reliance on imports, particularly from China, which currently dominates the global supply chain for these critical components used in electric vehicles, renewable energy, aerospace, and defense sectors.

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The scheme aims to create a manufacturing capacity of 6,000 metric tons per annum (MTPA) of REPMs over a seven-year period. This capacity will be allocated to five beneficiaries selected through a global competitive bidding process, with each beneficiary permitted to produce up to 1,200 MTPA. The financial structure includes INR6,450 crore in sales-linked incentives over five years and a capital subsidy of INR750 crore for setting up manufacturing facilities.

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India's consumption of REPMs is projected to double by 2030, necessitating a robust domestic supply chain. Currently, the country imports nearly all of its REPMs, with significant portions sourced from China. The new scheme is seen as a strategic move to enhance self-reliance, bolster national security, and support the government's broader goals of achieving Net Zero emissions by 2070 and fostering a developed India by 2047.

Cabinet Greenlights INR72.8B For Rare Earth Magnet Manufacturing

While the initiative has garnered support from various industry stakeholders, some experts express concerns regarding the ambitious two-year timeline for establishing manufacturing facilities. Saurabh Agarwal from EY India noted that the capital-intensive nature of the industry may pose challenges in meeting this deadline. Additionally, there are apprehensions about whether the scheme can effectively bridge the existing midstream processing gap in India's rare earth supply chain.

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Union Minister Ashwini Vaishnaw described the approval as a “major strategic decision,” emphasizing that without permanent magnets and semiconductor chips, modern manufacturing cannot function effectively. He stated, “By the completion of this programme, our import dependence for permanent magnets will practically reduce to zero.” The Automotive Component Manufacturers Association of India (ACMA) also welcomed the initiative, highlighting its potential to provide long-term resilience to the automotive supply chain.

Centre approves Rs 7,280-crore scheme to cut rare-earth magnet imports, secure supply chains

The government plans to expedite the operationalization of the scheme, with notifications expected within 15 days and bids likely to be invited by January 31, 2026. An Inter-Ministerial Group will be formed to establish eligibility norms and evaluation criteria for potential bidders, which may include both established companies and start-ups.

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India's INR7,280 crore scheme for REPM manufacturing marks a significant step toward reducing import dependence and enhancing domestic capabilities in a sector critical for future technologies. By fostering local production, India aims to secure its supply chains, promote advanced manufacturing, and position itself as a competitive player in the global market for rare earth magnets.

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