Cabinet Clears Rs 7,280 Cr Scheme for Rare Earth Magnets

• Union Cabinet approves ₹7,280 crore scheme to manufacture Rare Earth Permanent Magnets (REPM) in India
• The plan includes 6,000 MTPA production capacity across five beneficiaries
• Scheme duration is seven years, with a two-year setup period and five years of incentive disbursement

Recently, the Indian Cabinet has approved a landmark initiative to strengthen the country's supply chain for rare earth magnets by providing funding of ₹7,280 crores to encourage the domestic production of REPMs.

This initiative, which is called "The Scheme to Encourage Manufacturing of Sintered Rare Earth Permanent Magnets," comes soon after India's Commerce Minister highlighted the significance of rare earth minerals in future partnerships with Canada during discussions regarding a Comprehensive Economic Partnership Agreement (CEPA) between Canada and India.

The government stated, “This first-of-its-kind initiative aims to establish 6,000 metric tonnes per annum (MTPA) of integrated Rare Earth Permanent Magnet (REPM) manufacturing in India, thereby enhancing self-reliance and positioning India as a key player in the global REPM market”. 

REPMs are critical parts of the manufacturing chain for all types of electric vehicles, renewable energy solutions, consumer electronics, aerospace products, and defence systems. This new scheme additionally supports manufacturers of REPMs by establishing integrated manufacturing plants that would allow businesses to convert rare earth oxides into metals; alloys into finished magnets, etc.

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Shailesh Chandra, President of the Society of Indian Automobile Manufacturers (SIAM) said, “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”. 

He added, “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”.

The total expenditure of ₹7,280 crore comprises ₹6,450 crore for sales-linked incentives over a period of five years and ₹750 crore for capital subsidies to develop a total of 6,000 metric tons per annum (MTPA) production capacity for Renewable Energy Policy (REPM). The capacity will be divided among five participants through global competition, with each participant eligible for up to 1,200 MTPA.

The scheme is based upon a seven-year period, including a two-year incubation phase for construction of facilities and a five-year incentive payment period based on sales activities related to REPM. The programme is designed to help India develop its strategic capabilities in critical minerals and advanced manufacturing technologies.