Union Cabinet Approves Rs 7,280 Crore Scheme to Boost Domestic Manufacturing of Rare Earth Permanent Magnets

In a major step toward strengthening India's strategic manufacturing capabilities, the Union Cabinet on Wednesday approved a ₹7,280-crore scheme to promote domestic production of sintered Rare Earth Permanent Magnets (REPM). The initiative, cleared under the chairmanship of Prime Minister Narendra Modi, aims to position India as a significant player in the global magnet supply chain, which is vital for electric mobility, renewable energy, consumer electronics, aerospace, and defence.

Information and Broadcasting Minister Ashwini Vaishnaw described the approval as a “very important, strategic decision,” noting that it marks the first structured attempt to build a full-scale REPM manufacturing ecosystem within the country.

Under the scheme, the government will offer ₹6,450 crore in sales-linked incentives over five years, along with ₹750 crore in capital subsidy to help establish an aggregate manufacturing capacity of 6,000 MTPA. The overall duration will be seven years, including a two-year gestation period for setting up integrated facilities and five years of incentive disbursement. Capacity will be allocated to five beneficiaries through global competitive bidding, with each eligible for up to 1,200 MTPA.

The programme envisions the entire REPM value chain—converting rare earth oxides into metals, metals into alloys, and alloys into finished magnets—being developed domestically. The government said the initiative will not only reduce import dependence but also secure India’s magnet supply chain as industries transition to advanced mobility and clean energy solutions.

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The auto industry, a key consumer of high-performance magnets, strongly endorsed the announcement. Shailesh Chandra, President of the Society of Indian Automobile Manufacturers (SIAM), said the scheme comes at a crucial time for the sector’s electrification push. “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 electrified vehicles,” he said. With magnets being central to electric motors, he noted that the move will accelerate the adoption of clean mobility, reduce dependence on crude oil, and strengthen India’s broader sustainability and energy-security goals.

The auto component industry echoed this sentiment. ACMA President Vikramapati Singhania called the Cabinet’s approval a strategic, forward-looking intervention that addresses a major gap in the EV and advanced mobility ecosystem. “Rare Earth Permanent Magnets 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,” he said. He added that the initiative will offer long-term resilience to the automotive supply chain, spur investment in advanced materials, and help Indian firms integrate more deeply into global value chains for EVs and clean energy.

India currently relies heavily on imports of rare earth magnets—primarily from China—due to limited domestic refining and magnet-making capabilities. Building an indigenous manufacturing base, the government said, aligns with long-term goals such as Net Zero 2070 and the vision of Viksit Bharat @2047, while also creating opportunities for innovation and value creation within the country (With Inputs from ANI)