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Self-reliance in mind, Cabinet nod for Rs 7,280-crore rare earth magnets plan
India’s consumption of rare earth permanent magnets is expected to double by 2030, but it currently meets its demand primarily through imports, the government said.
Rare earth magnets, especially neodymium-iron-boron (NdFeB) magnets, are crucial for EV manufacturing, particularly in electric motors.
The Union Cabinet Wednesday approved a Rs 7,280-crore rare earth manufacturing programme, as India looks to cut reliance on imports for the critical elements crucial to sectors ranging from electric vehicles and aerospace to defence and electronics.
The government said that the ‘Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets’ is a first-of-its-kind initiative, and aims to establish 6,000 metric tonnes per annum (MTPA) of integrated rare earth permanent magnet (REPM) manufacturing in India, to enhance the country’s self-reliance and positioning it as a key player in the global REPM market.
India’s consumption of rare earth permanent magnets is expected to double by 2030, but it currently meets its demand primarily through imports, the government said. Currently, China has a stranglehold over these critical elements, and it had introduced export controls on the magnets in April, in response to the tariffs imposed on it by the US.
The Indian Express had earlier reported that Beijing stonewalled applications made by companies that supply components to India’s automobile manufacturers for a long time, but had started to clear some applications, following a cumbersome bureaucratic procedure.
India imported over 53,000 metric tonnes of rare earth magnets during the fiscal year ending March 2025.
In a press release, the government said the scheme will support the creation of integrated REPM manufacturing facilities, involving conversion of rare earth oxides to metals, metals to alloys, and alloys to finished REPMs. The total duration of the scheme will be 7 years from the date of award, including a two-year gestation period.
It consists of a sales-linked incentives of Rs 6,450 crore on REPM sales for five years and capital subsidy of Rs 750 crore for setting up an aggregate of 6,000 MTPA of REPM manufacturing facilities. The scheme envisions allocating the total capacity to five beneficiaries through a competitive bidding process. Each beneficiary will be allotted up to 1,200 MTPA of capacity.
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New restrictions on rare earth magnet and related materials from China that kicked in from April 4 have impacted automakers across the world, including vehicle manufacturers in India. EV makers here are particularly affected, and have been staring at a potential shortage of critical components, which raises concerns of price hikes and production delays in a nascent, cost-sensitive segment of the auto market.
The Indian car industry had initiated a conversation with the government to smoothen the process for procuring rare earth magnets from Beijing. While the Chinese government had not imposed an outright ban on the export of rare earth magnets the process had been made very difficult – including requiring end-user licence and endorsements from the importing country – which could take up a long time and posed shortage risks in the meantime.
Rare earth magnets, especially neodymium-iron-boron (NdFeB) magnets, are crucial for EV manufacturing, particularly in electric motors. They provide the strong magnetic fields needed for efficient and powerful electric motors, including traction motors that drive EVs. These magnets also play a major role in other EV components like power steering systems, wiper motors, and braking systems.
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