Cabinet Approves Rs 7,280 Cr Scheme To Promote Manufacturing Of Rare Earth Magnets

New Delhi: The Union Cabinet on Wednesday cleared a Rs 7,280-crore incentive scheme, which is aimed at boosting domestic manufacturing of rare earth magnets in the country. The proposal, designed with a validity of seven years, seeks to reduce India's import dependence on critical minerals and strengthen the supply chain for advanced manufacturing sectors.

Announcing this scheme, information and broadcasting minister Ashwini Vaishnaw told reporters after the cabinet meeting that the scheme would promote manufacturing of sintered rare earth permanent magnets (REPM). “The scheme, however, aims to create a capacity of 6,000 metric tonne per annum (MTPA),” the minister said.

“The core of the initiative is to create a full-value-chain manufacturing ecosystem, covering conversion of rare earth oxides to metals, metals to alloys, and alloys to finished permanent magnets. The approval aligns with India’s geopolitical strategy around critical minerals. Rare earths represent one of the most tightly controlled mineral value chains globally, and India has been pursuing supply partnerships under its critical minerals mission,” he added.

Rare earth magnets are used in major industries including electric vehicles, aerospace, electronics, medical devices and defence sectors. As per the government, the total duration of the scheme will be 7 years from the date of award, including a 2-year gestation period for setting up an integrated REPM manufacturing facility, and 5 years for incentive disbursement on the sale of REPM.

“Out of the total financial outlay of Rs7,280 crore, it comprises sales-linked incentives of Rs 6,450 crore on REPM sales for five years and capital subsidy of Rs750 crore for setting up an aggregate of 6,000 MTPA of REPM manufacturing facilities. However, the scheme envisions allocating the total capacity to five beneficiaries through a global competitive bidding process and each beneficiary will be allotted up to 1,200 MTPA of capacity,” the government said in a statement.

In a separate statement, the ministry of heavy industries also hailed the decision, saying that this first-of-its-kind initiative aims to establish 6,000 MTPA of integrated REPM manufacturing in India, thereby enhancing self-reliance and positioning India as a key player in the global REPM market. “Driven by the rapidly growing demand from electric vehicles, renewable energy, industrial applications, and consumer electronics, India’s consumption of REPMs is expected to double by 2030 from 2025,” the ministry said.

“REPMs are one of the strongest types of permanent magnets and are vital for electric vehicles, renewable energy, electronics, aerospace, and defence applications. 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 ministry added. #End#