India Approves Scheme for Rare Earth Magnets

Summary: Approval of Scheme for Manufacturing Rare Earth Permanent Magnets (REPM)

• Union Cabinet Decision: On November 26, 2025, the Union Cabinet approved a new scheme titled ‘Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets’ with an allocation of ₹7,280 crore.

• Objective: The initiative aims to establish a manufacturing capacity of 6,000 metric tonnes per annum (MTPA) of integrated REPM in India, enhancing self-reliance and positioning the nation as a significant player in the global REPM market.

• Importance of REPMs: Rare Earth Permanent Magnets are crucial for various industries, including:

  • Electric vehicles
  • Renewable energy
  • Electronics
  • Aerospace
  • Defence

• Government Statements:

  • The scheme is expected to support the integration of manufacturing processes, converting rare earth oxides to metals, metals to alloys, and alloys into finished REPMs, thus ensuring a stable supply chain for electrified vehicles.
  • The initiative is aligned with India’s broader sustainability goals by promoting clean mobility solutions and reducing carbon emissions.

• Financial Details:

  • Total outlay: ₹7,280 crore
  • Components of financial support:
    • Sales-linked incentives of ₹6,450 crore for REPM sales over five years
    • Capital subsidy of ₹750 crore for setting up manufacturing facilities
  • Capacity will be allocated to five beneficiaries through a global competitive bidding process, with each beneficiary receiving up to 1,200 MTPA.

• Duration: The scheme will have a total duration of seven years, which includes a 2-year gestation period for facility setup and 5 years for incentive disbursement.

• Industry Support:

  • The scheme has garnered positive response from the auto industry, highlighting its potential to reduce import dependence, enhance supply chain resilience, and stimulate investment in advanced materials.
  • Notable comments from industry leaders underscore the importance of localizing rare earth magnets for the growth of both original equipment manufacturers (OEMs) and component manufacturers in the context of clean energy technologies.

• International Cooperation: The scheme follows remarks by Commerce Minister Piyush Goyal about the potential for cooperation on critical minerals between India and Canada, amidst discussions on a Comprehensive Economic Partnership Agreement.

• Strategic Importance: The adoption of this scheme is positioned as a critical step toward enhancing India's energy security and aligning with global value chains in the electric vehicle and clean energy sectors.

This initiative marks a significant development in India's efforts to secure its supply chains, promote domestic manufacturing, and meet future energy demands while contributing to the global transition to sustainable energy solutions.