India's Rare Earth Strategy: Building Domestic Magnet Production Capacity

India has unveiled a comprehensive strategy to develop domestic rare earth permanent magnet manufacturing, announcing dedicated corridors across four states in the Union Budget 2026-27.

The budget identified Odisha, Kerala, Andhra Pradesh, and Tamil Nadu as sites for rare earth corridors focused on mining, processing, research, and manufacturing activities. The initiative builds upon a ₹7,280 crore scheme approved in November 2025 to establish 6,000 metric tonnes per annum of integrated rare earth permanent magnet (REPM) capacity.

REPMs are critical components in electric vehicles, wind turbines, electronics, aerospace systems, and defense equipment. Currently, India imports 60-80% of its permanent magnet requirements by value, with 85-90% by quantity coming from China during 2022-25.

The manufacturing scheme allocates ₹6,450 crore in sales-linked incentives over five years and ₹750 crore in capital subsidies. Up to five beneficiaries will be selected through competitive bidding to establish facilities covering the full value chain from rare-earth oxides to finished magnets.

India possesses 13.15 million tonnes of monazite deposits containing approximately 7.23 million tonnes of rare-earth oxides. The Geological Survey of India has identified 482.6 million tonnes of rare-earth ore resources across 34 exploration projects.

The corridors will integrate with existing infrastructure operated by IREL (India) Limited, which runs a rare earth extraction plant in Odisha and refining unit in Kerala with a combined processing capacity of 10 lakh tonnes annually.

Consumption of rare earth permanent magnets in India is projected to double by 2030 due to growth in electric mobility, renewable energy, electronics, and defense applications.

The Ministry of Mines has established partnerships with mineral-rich countries including Australia, Argentina, Zambia, Mozambique, Peru, Zimbabwe, Malawi, and Côte d'Ivoire to secure critical mineral supplies. India also participates in the Minerals Security Partnership and Indo-Pacific Economic Framework for supply chain cooperation.

Khanij Bidesh India Limited, a joint venture of state-owned mining companies, has signed agreements for overseas mineral exploration, including lithium brine blocks in Argentina.

The government positions these initiatives as aligned with its Atmanirbhar Bharat self-reliance agenda, Net Zero 2070 climate goals, and Viksit Bharat 2047 development vision.