India Unveils ₹7,300-Crore Scheme to Boost Rare Earth Magnet Production

India is set to introduce a landmark ₹7,300-crore incentive scheme aimed at establishing a fully indigenous rare earth permanent magnet (REPM) manufacturing ecosystem. The scheme, designed to strengthen domestic supply chains and production capabilities, is expected to be placed before the Union Cabinet headed by Prime Minister Narendra Modi soon.

India’s ₹7,300-Crore Scheme to Boost Domestic Magnet Production

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The initiative has already received approval from the Expenditure Finance Committee (EFC), according to government sources. Of the total outlay, ₹6,500 crore is earmarked for capital expenditure, while ₹800 crore will cover operational costs. The scheme is expected to run for seven years and will have an annual production capacity of up to 6,000 tonnes, sufficient to meet India’s growing domestic demand for rare-earth permanent magnets.

Reducing Dependence Amid Global Supply Risks

The move comes in response to increasing global supply risks, particularly after China, the world’s dominant supplier, imposed export restrictions in April 2025 on seven rare earth elements and finished magnets. Under these rules, Chinese exporters are required to obtain licences and provide end-use declarations confirming that the materials will neither be used for defence purposes nor re-exported to the US.

Rare earth permanent magnets are crucial components for a wide range of technologies, including electric vehicle propulsion systems, power windows, speakers, and renewable energy generators. India currently relies almost entirely on imports to meet its requirements. Government estimates indicate an annual domestic demand of approximately 4,010 tonnes, which is projected to nearly double to 8,220 tonnes by 2030.

Driving Technological Self-Reliance and Future Demand

The proposed initiative, likely to be named the Scheme to Promote Sintered Rare Earth Permanent Magnet Manufacturing in India, aims to create a self-reliant domestic ecosystem for the production and supply of these critical magnets. By doing so, the government intends to reduce import dependence, enhance technological capabilities, and secure strategic materials essential for India’s growing electric vehicle and renewable energy sectors.

According to officials, the plan will also help build supply chains and processing facilities for rare earth magnets, enhancing the nation's standing in a market that is presently controlled by China.  Over the next ten years, analysts predict that the program might greatly increase local manufacturing, provide employment, and promote technical innovation.

Conclusion

India's ₹7,300-crore plan is a calculated move towards producing rare earth magnets on its own.  Reducing reliance on imports and strengthening vital technology supply chains are the goals of the effort, which aims to meet future domestic demand and create a totally indigenous ecosystem.