Mumbai: India has taken a significant step towards strengthening its industrial base with the Union Cabinet approving a ₹7,280 crore scheme to promote domestic manufacturing of sintered rare earth permanent magnets. The initiative is the first of its kind in the country and is intended to reduce dependence on imports while positioning India as a competitive player in the global market.
Rare earth permanent magnets, or REPMs, are among the strongest types of permanent magnets and are critical to a wide range of industries. They are used in electric vehicles, renewable energy systems, aerospace, defence and consumer electronics. At present, India’s demand is largely met through imports, leaving sectors exposed to supply chain risks. The new scheme seeks to establish 6,000 metric tonnes per annum of integrated manufacturing capacity, covering the entire process from rare earth oxides to finished magnets.
The financial structure of the scheme reflects its ambition. Of the total outlay, ₹6,450 crore will be provided as sales-linked incentives over five years, while ₹750 crore will be allocated as capital subsidies to set up facilities. Capacity will be distributed among five beneficiaries through a global competitive bidding process, with each allotted up to 1,200 metric tonnes per annum. The scheme will run for seven years, including a two-year gestation period for establishing facilities and five years of incentive disbursement.
Officials described the initiative as a landmark step towards strengthening the domestic REPM manufacturing ecosystem. By fostering indigenous capabilities, the scheme is expected to generate employment, enhance competitiveness and advance India’s long-term sustainability commitments. It embodies the government’s vision of building a technologically self-reliant and globally competitive industrial base under the framework of Viksit Bharat @2047.
The implications for industry are wide-ranging. For the automotive sector, domestic REPM production will support the expansion of electric vehicles, reducing reliance on imported components and improving cost efficiency. In defence and aerospace, secure access to magnets will strengthen supply chains for critical technologies. Renewable energy projects, particularly wind power, will benefit from reliable domestic supply, while consumer electronics manufacturers will gain from reduced import dependence.
The scheme also signals India’s intent to compete in a market currently dominated by a handful of countries. By investing in integrated facilities, India aims to capture a share of the global REPM market, which is expected to grow significantly in the coming decade. The competitive bidding process is designed to attract capable players and ensure that facilities are established on a sound commercial basis.
The timing of the initiative is notable. Global demand for rare earth magnets is rising sharply, while supply chains remain concentrated and vulnerable to geopolitical pressures. India’s move to establish domestic capacity reflects both economic pragmatism and strategic foresight. By reducing import dependence, the country is seeking to insulate its industries from external shocks and build resilience in sectors critical to national growth.
The Union Cabinet’s approval of the scheme underscores the government’s commitment to aligning industrial policy with sustainability goals. By supporting REPM manufacturing, India is not only strengthening its industrial base but also advancing its net zero 2070 target. The magnets are essential for technologies that reduce carbon emissions, from electric vehicles to renewable energy systems, making the initiative a cornerstone of India’s climate strategy.
As the scheme moves into implementation, attention will turn to the bidding process and the establishment of facilities. The success of the initiative will depend on the ability of selected beneficiaries to build integrated manufacturing capacity and deliver magnets that meet global standards. If successful, the scheme could mark the beginning of a new chapter in India’s industrial development, with rare earth permanent magnets at its core.
