India Readies Rs 5,000 Crore Push for Rare Earth Magnets — A Bold Move to Cut China’s Grip | Exclusive

The government is gearing up to roll out a dedicated Production-Linked Incentive (PLI) scheme worth Rs5,000 crore to promote the domestic manufacturing of rare earth magnets — critical components used in electric vehicles (EVs), wind turbines, electronics, defence systems, and semiconductor equipment.

Sources from the Ministry of Heavy Industry (MHI) familiar with the matter said the proposal is in the “final stages” of “inter-ministerial consultations” and could be announced in the coming months.

“The initiative is aimed at reducing India’s heavy reliance on imports, particularly from China, which dominates the global supply of rare earth elements and magnets,” sources told Republic Business.

Notably, rare earth magnets are a strategic resource, with China currently controlling about 80% of global production and exports. This domination has left most countries, including India, overreliant on Chinese supplies for key industries.

It may be recalled that the proposed scheme was initially planned at around Rs1,350 crore but has now been enhanced to Rs5,000 crore, signalling a stronger push towards self-reliance.

Why rare earth magnets matter

It is pertinent to note that rare earth magnets, known for their powerful magnetic properties despite their small size and weight, are essential for high-performance motors, generators, and advanced electronics.

Industry experts reckon that global demand for such products is surging, driven by the transition to clean energy, rapid growth in EV adoption, and expanding semiconductor manufacturing. However, supply is limited, with only a few countries (especially China) controlling extraction and processing capacity.

How the PLI scheme will work

Under the plan, companies investing in domestic rare earth magnet manufacturing will receive incentives linked to production volumes and sales, according to sources.

“This support is expected to offset the high capital costs and technical challenges of setting up advanced processing and fabrication facilities. The scheme is also likely to encourage joint ventures, technology transfers, and collaborations with established global players,” sources told Republic Business.

As per media reports, some of the companies that have evinced interest in the production of rare earth magnets are Anil Agarwal-owned Vedanta Group, JSW Group, Sona BLW Precision Forgings (Sona Comstar), Mahindra & Mahindra, Uno Minda, Tata Motors, Hindustan Zinc, IREL (India Rare Earths Limited), Midwest Advanced Materials, Entellus Industries, Gujarat Mineral Development Corporation (GMDC), Proterial Ltd (Japan), etc.

Also Read: India Goes Big on Chips: Cabinet Okays Rs 4,594 Crore Investment in Semiconductor Revolution | Republic World

A bigger objective

Industry observers reckon that the PLI initiative aligns with India’s broader critical minerals strategy, which combines two approaches: partnering with resource-rich nations to secure supplies from overseas, and tapping domestic reserves, particularly in the coastal sands of Odisha, Andhra Pradesh, Tamil Nadu, Kerala, and Gujarat.

The government has also tied this effort to its semiconductor programme. On August 12, the cabinet cleared four new chip-making plants, including a facility in Bhubaneswar to produce silicon carbide — a material requiring refined minerals that India currently imports but aims to make locally.

Long-term impact

Numerous industry players claim that if this scheme is executed effectively, it would accelerate India’s position in advanced manufacturing, create skilled jobs, and strengthen supply chain resilience in sectors ranging from renewable energy to electronics.

As Uday Narang, Founder & Chairman, Omega Seiki Mobility, puts it, “The government’s bold step to allocate Rs5,000 crore towards strengthening India's rare earth magnet ecosystem is a game-changer. This move not only secures our critical supply chains but also signals a strong commitment to building a self-reliant, future-ready India. We at Omega Seiki Mobility applaud this visionary leadership and stand ready to support the nation’s journey towards technological sovereignty."