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

The Union government approved a scheme worth Rs 7,280 crore to support the manufacturing of sintered rare earth permanent magnets (REPM) in India. The initiative aims to establish an annual capacity of 6,000 metric tonnes through integrated manufacturing units. The scheme will run for seven years, including a two-year period for setting up facilities and a five-year incentive disbursement phase.

REPMs are used in electric vehicles, renewable energy equipment, electronics, defence systems and aerospace applications. India’s demand for these magnets is expected to rise significantly by 2030, and most supplies are currently imported. The scheme is intended to build a local supply chain covering the conversion of rare earth oxides into metals, followed by alloying and magnet production.

Structure and Incentives

The approved outlay includes Rs 6,450 crore as sales-linked incentives over five years and Rs 750 crore as capital subsidy. The total capacity will be divided among five beneficiaries, with each eligible for up to 1,200 MTPA. Selection will be done through global competitive bidding.

Sectoral Impact

According to the government, increasing domestic REPM production is expected to support industries such as automotive, defence and aerospace while aligning with India’s long-term climate commitments. The scheme also aims to reduce import dependence and build a stable magnet supply chain for emerging technologies.

Shailesh Chandra, President, SIAM, said, “The Indian Automobile industry welcomes the Government of India’s newly announced scheme to promote the domestic manufacturing of Rare Earth permanent magnets, with an allocated outlay of Rs 7,280 crore. This initiative is a significant step toward building a resilient and stable supply chain, particularly for components and sub-assemblies essential for the production of electrified vehicles. The scheme is expected to accelerate adoption of clean mobility solutions and support India’s broader sustainability goals. By strengthening indigenous manufacturing capabilities, it will contribute to reducing carbon emissions and lowering dependence on crude oil imports, further enhancing the nation’s energy security.”

Stephane Deblaise, CEO Renault Group India, said, “The Government’s decision of investing Rs 7280 crore for India’s first integrated Rare Earth Permanent Magnet manufacturing scheme is a pivotal step in strengthening the nation’s self-reliance aspirations. This initiative reflects India’s strategic intent to strengthen its rare-earth refining capabilities and accelerate high-value manufacturing. For the automobile sector, localizing rare earth magnets will boost growth for both auto OEMs and component manufacturers, support clean energy powertrains, reduce import dependence, deepen the domestic value chain, and enhance long-term competitiveness. We welcome this vision and look forward to contributing to a robust, future-ready mobility landscape that supports India’s sustainable growth and its ambition to become a global automotive hub.”

Vikrampati Singhania, President, ACMA, said, “ACMA wholeheartedly welcomes the Cabinet’s approval of the REPM Manufacturing Scheme. This is a strategic and forward-looking intervention that addresses one of the most critical gaps in the EV and advanced mobility ecosystem. Rare Earth Permanent Magnets are foundational to electric motors and high-efficiency systems, and the establishment of a domestic, integrated manufacturing base will significantly strengthen India’s technological competitiveness. This initiative will not only reduce import dependence but also provide long-term resilience to the automotive supply chain, encourage investments in advanced materials, and position India strongly in global value chains for EVs and clean energy. We commend the Government’s vision and remain fully committed to supporting the industry in leveraging this opportunity for innovation, value creation, and Atmanirbhar Bharat.”

Vinod Aggarwal, MD & CEO, VE Commercial Vehicles, said, “VECV welcomes the Cabinet’s approval of the Rs 7,280 crore Rare Earth Permanent Magnet (REPM) manufacturing scheme. Rare earth magnets are vital for electric drivetrains, power electronics, and high-efficiency systems that will increasingly support the commercial vehicle industry’s shift towards cleaner and more energy-efficient technologies. We appreciate the government’s vision of this forward-looking policy in creating an integrated domestic value chain, from rare earth oxides to metals, alloys, and finished magnets. By addressing a critical supply-side vulnerability in future mobility, this initiative will significantly strengthen India’s self-reliance in advanced materials. As the country moves towards its Net Zero 2070 target, the availability of locally manufactured REPMs will accelerate the adoption of next-generation electric and energy-efficient commercial vehicles. This forward-looking policy is a major boost to Make in India and will enhance the long-term competitiveness of the automotive and commercial vehicle ecosystem.”

Vikas Singh, Managing Director, Greaves Electric Mobility, said, “We welcome the government’s Rare Earth Permanent Magnets scheme in strengthening India’s EV industry. These materials are critical components to deliver high-quality EV motors. Building this capability in India will meaningfully enhance supply-chain resilience, long-term localisation and value-add in creating an indigenous EV manufacturing ecosystem. As the industry scales, such policy support reinforces our collective transition towards clean mobility and strengthens India’s position as a reliable, Atmanirbhar hub for future-ready EV technologies."