NEW DELHI, Nov 26: The Rs 7,280 crore rare earth magnets manufacturing scheme will help boost the domestic production and supply of Rare Earth Permanent Magnets (REPM) and reduce dependence on China, industry said.
The ‘Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPMs)’ was approved at a Cabinet meeting on Wednesday.
This scheme will benefit the entire value chain from mining, extraction , processing of rare-earth elements (REEs) and manufacturing of permanent magnets required for advanced material industry and national security, the Federation of Indian Mineral Industries (FIMI) said.
Manish Singhal, Secretary General Assocham said the incentive scheme marks an important advancement in strengthening the nation’s strategic manufacturing capabilities.
“As India deepens its focus on critical minerals and key growth sectors including electric mobility, electronics, medical devices, renewable energy and defence, the move to establish a 6,000 MTPA domestic rare earth magnet capacity is both timely and transformative,” he said.
It will reduce dependence on a highly concentrated global supply chain and position India to play a far more influential role in future technologies, Singhal added.
According to Raju Kumar, Partner and Energy Tax Leader, EY India the scheme, along with allocations in National Critical Minerals Mission signals a broader national commitment to building a secure, competitive critical-minerals ecosystem.
The proposed support for magnet manufacturing, a segment where India has been historically dependent on global supply chains, can unlock new opportunities across mining, processing, alloying and advanced materials, Kumar said.
It creates headroom for Indian companies to participate in high-value applications spanning electric mobility, renewables, electronics and defence.
“The real test now is disciplined implementation: ensuring access to technology, developing high-quality processing capability, building responsible mining practices and maintaining ESG safeguards. If executed well, this initiative can help strengthen India’s long-term energy-transition and manufacturing competitiveness,” he said.
The Automotive Component Manufacturers Association of India (ACMA) said this initiative marks India’s first concerted effort to build an integrated REPM manufacturing ecosystem – spanning rare earth oxides to metals, alloys, and finished magnets-enabling 6,000 MTPA of domestic capacity.
REPMs are critical to the automotive value chain, particularly for electric drivetrains, motors, sensors, and advanced electronics, and are equally vital for renewable energy, aerospace, defence, and industrial applications.
India’s current dependence on imports for these magnets has long been a strategic vulnerability. The Cabinet decision is therefore transformative for building self-reliance in future mobility technologies and securing industry supply chains.
“This is a strategic and forward-looking intervention that addresses one of the most critical gaps in the EV and advanced mobility ecosystem. REPMs are foundational to electric motors and high-efficiency systems, and the establishment of a domestic, integrated manufacturing base will significantly strengthen India’s technological competitiveness.
“This initiative will not only reduce import dependence but also provide long-term resilience to the automotive supply chain, encourage investments in advanced materials, and position India strongly in global value chains for EVs and clean energy,” ACMA President Vikrampati Singhania said.
SIAM President Shailesh Chandra said this initiative is a significant step toward building a resilient and stable supply chain, particularly for components and sub-assemblies essential for the production of electric vehicles.
“The scheme is expected to accelerate adoption of clean mobility solutions and support India’s broader sustainability goals. By strengthening indigenous manufacturing capabilities, it will contribute to reducing carbon emissions and lowering dependence on crude oil imports, further enhancing the nation’s energy security,” he said.
Deccan Gold Mines Ltd Managing Director Modali Hanuma Prasad said the country definitely needs this kind of facility to be self-sufficient in rare earth magnets.
To make it more sustainable, new rare earth mineral deposits are to be discovered in India, for which a lot of efforts are needed from the exploration and mining industry.
Rare earth magnets are used in major industries including electric vehicles, aerospace, electronics, medical devices and defence. The scheme envisions allocating the total capacity to five beneficiaries through a global competitive bidding process. Each beneficiary will be allotted up to 1,200 MTPA of capacity. (PTI)
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