In a significant move to boost India’s control over critical minerals and high-tech manufacturing, the Union Cabinet has approved a ₹7,280-crore scheme. This initiative aims to develop the country’s first integrated system for producing rare earth permanent magnets (REPM).
The decision, made on 26 November under Prime Minister Narendra Modi’s leadership, represents a strategic effort to lessen India’s reliance on imported magnets. These magnets are essential components in electric vehicles, renewable energy systems, aerospace, defence technologies, and various high-efficiency electronics.
The government referred to the initiative as a unique industrial effort that not only supports manufacturing but also positions India as a serious competitor in the global rare earth market.
A Strategic Leap Toward Self-Reliance
Rare earth permanent magnets are vital for modern technology. Their compact size and strong magnetic power make them crucial for EV motors, wind turbines, high-performance sensors, and advanced industrial equipment.
Despite having one of the largest reserves of rare earth minerals globally, India has historically struggled to refine, separate, alloy, and manufacture these magnets at scale. The new scheme aims to change that.
Information and Broadcasting Minister Ashwini Vaishnaw stated that this initiative is as ambitious as the country’s semiconductor mission. He mentioned the incentives in this program are expected to help India achieve complete self-reliance in rare earth magnet manufacturing within the next three to four years.
“This is a major strategic decision,” Vaishnaw said during a briefing with reporters. “A fully integrated manufacturing system is necessary to ensure that key industries do not halt because of global supply disruptions.”
India currently requires around 4,000 to 5,000 tonnes of magnets annually, nearly all of which is imported. With rising consumption—especially due to electrification and renewable energy—the government views this scheme as crucial for securing a long-term supply.
India’s Untapped Rare Earth Advantage
India has an estimated 6.9 million tonnes of rare earth reserves, including extensive placer deposits along coastal areas. However, for decades, the country’s rare earth materials have either remained unprocessed or been exported for further processing.
As global supply chains change due to geopolitical tensions, particularly between the U.S. and China, rare earths have become strategically vulnerable. China currently controls over 85% of global REPM production, a situation that countries worldwide are now trying to counter.
Vaishnaw emphasized that this new initiative addresses not just economic growth but also national security and industrial independence. “India possesses one of the largest rare earth reserves. We must use this advantage,” he stressed.
An Integrated, Cross-Government Approach
The newly approved scheme will operate through a coordinated model involving multiple government sectors. It will work alongside ongoing missions such as:
- India Semiconductor Mission (ISM)
- National Critical Minerals Mission
Both public and private sector companies will be eligible to participate, and early signs indicate significant interest from the automotive, electronics, and steel industries.
Companies selected for the scheme will go through a transparent process. They will have the freedom to decide where to establish their manufacturing locations.
Environmental Safeguards Promised
To address concerns surrounding rare earth processing-a sector often linked to waste-management issues-Vaishnaw assured that the initiative would be subject to strict environmental oversight.
He stated that global best practices for waste management and resource handling would be required for beneficiary companies. The industry already possesses the necessary experience and techniques for environmentally responsible operations.
Industry Welcomes the Move
Multiple industry groups have welcomed the decision, describing it as a long-overdue move that fills a crucial gap in India’s energy transition efforts.
Shailesh Chandra, president of the Society of Indian Automobile Manufacturers (SIAM), stated that this initiative will be vital for strengthening the supply chain for EV production.
“This move creates a more resilient and stable supply base for high-value components needed in electrified mobility,” Chandra said. “It will also lessen dependency on crude oil imports and enhance India’s long-term energy security.”
Vikrampati Singhania, president of the Automotive Component Manufacturers Association (ACMA), noted that domestic magnet manufacturing will greatly improve India’s competitiveness in advanced mobility technologies.
“Rare earth magnets are key to high-efficiency systems, motors, sensors, and advanced electronics,” he explained. “India’s reliance on imports has been a strategic vulnerability. This scheme directly addresses that issue.”
He added that this initiative not only strengthens the automotive supply chain but also impacts key sectors like defence, aerospace, renewables, and industrial manufacturing.
Experts Call It a Vital Step Closing a Historic Gap
Raju Kumar, partner and energy tax leader at EY India, described the initiative as a strategic and future-focused action that shows the country’s commitment to creating an independent, competitive critical-minerals ecosystem.
He believes the support for magnet manufacturing-traditionally dominated by foreign producers—opens new opportunities in mining, processing, alloying, and advanced materials.
However, he pointed out that success will heavily depend on execution: gaining access to global technology, developing high-quality refining and separation abilities, practicing responsible mining, and adhering to environmental standards.
“If implemented properly, this scheme can strengthen India’s energy transition plan and manufacturing base for many years,” Kumar said.
Breaking China’s Monopoly: The Bigger Challenge
Experts warn that raw mineral availability is not the main challenge; rather, it is the lack of processing and manufacturing capabilities.
Anupam Kumar, co-founder and CEO of MiniMines, stated that China’s dominance is due to its extensive expertise in refining, separation, and magnet production—areas where India has historically fallen short.
“China controls over 85% of global magnet production because it has consistently invested across the entire value chain,” he said. “India must rebuild capabilities it has lacked since the 1990s.”
He suggested that the scheme will foster innovation, draw investment into recycling and advanced materials, and create opportunities for local clean-tech firms.
Battery recycling, he added, will be crucial for securing materials like lithium and rare earths from old batteries.
Key Features of the REPM Scheme
(Only essential highlights included; rest covered in narrative above.)
The scheme allocates ₹7,280 crore, which includes ₹6,450 crore in sales-linked incentives and ₹750 crore in capital subsidies.
It aims to establish 6,000 MTPA of REPM capacity distributed among five manufacturers through global bidding.
It will run for seven years, with a two-year setup period and a five-year incentive window.
It aligns with India’s increasing demand from EVs, renewable energy, industrial uses, and electronics.
It sets up India’s first integrated magnet manufacturing system, reducing reliance on imports and enhancing supply chain stability.
A Turning Point for India’s High-Tech Manufacturing Future
The Cabinet’s approval of the ₹7,280-crore REPM scheme reflects an increasing realization that control over critical minerals and related technologies will shape future economic power. Rare earth magnets are central to rapidly growing sectors—from electric mobility to national defence—and countries are racing to secure their supply chains.
By committing to create a domestic ecosystem, India aims to transition from being a supplier of raw minerals to a manufacturer of advanced materials. If carried out effectively, this initiative could transform India’s role in global value chains, attract new investments, and stimulate long-term growth in clean energy and high-tech manufacturing.
