Cabinet Approves Rs 7,280 Crore Scheme for Rare Earth Magnet Manufacturing

The Union Cabinet has approved a Rs 7,280 crore scheme to promote manufacturing of sintered rare earth permanent magnets in India, marking the government's first initiative to establish an integrated production ecosystem for these critical components.

The scheme aims to establish manufacturing capacity of 6,000 metric tons per annum of rare earth permanent magnets through integrated facilities that will convert rare earth oxides to metals, metals to alloys, and alloys to finished products.

Rare earth permanent magnets are essential components for electric vehicles, renewable energy systems, electronics, aerospace, and defence applications. India currently meets its demand for these magnets primarily through imports.

The financial structure includes Rs 6,450 crore in sales-linked incentives distributed over five years and Rs 750 crore in capital subsidies for facility establishment. The scheme will allocate capacity to five beneficiaries through global competitive bidding, with each recipient eligible for up to 1,200 metric tons per annum of production capacity.

The total scheme duration spans seven years from the award date, comprising a two-year gestation period for facility setup and five years for incentive disbursement based on magnet sales.

Government projections indicate that India's consumption of rare earth permanent magnets is expected to double by 2030 compared to 2025 levels, driven by expanding demand from electric vehicles, renewable energy, industrial applications, and consumer electronics sectors.

The initiative is designed to strengthen domestic supply chains for automotive, defence, and aerospace industries while supporting India's Net Zero 2070 commitment and the Atmanirbhar Bharat initiative.

The scheme represents the government's approach to building indigenous capabilities in strategic manufacturing sectors and reducing dependence on imports for critical components required across multiple industries.