Cabinet approves ₹7,280 crore plan to build rare earth magnet capacity
New Delhi, Nov 26 2025
The Cabinet has approved the scheme to develop 6,000 mtpa of integrated rare earth permanent magnet capacity, aiming to strengthen critical minerals supply chain and reduce import reliance
The Union Cabinet on Wednesday approved the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets, with a financial outlay of ₹7,280 crore. The first-of-its-kind initiative aims to create 6,000 metric tonnes per annum (mtpa) of integrated rare earth permanent magnet (REPM) manufacturing capacity in India, strengthening the country’s self-reliance in a strategically vital sector.
REPMs, which are among the strongest types of permanent magnets, are essential for electric vehicles, renewable energy systems, electronics, aerospace and defence applications. The scheme will support fully integrated manufacturing, from converting rare earth oxides to metals, processing alloys and producing finished magnets.
What is the scheme structure?
The scheme includes ₹6,450 crore in sales-linked incentives for five years and a ₹750 crore capital subsidy for building capacity totalling 6,000 mtpa.
A global competitive bidding process will select five beneficiaries, each eligible for up to 1,200 mtpa. All approved facilities must integrate the full value chain—from rare earth oxides to finished REPMs.
The plan will run for seven years, including a two-year gestation period and five years of incentive disbursal.
Govt's strategic goal
The government said the initiative aligns with the Atmanirbhar Bharat Abhiyan and India’s Net Zero 2070 commitment. By enabling domestic REPM production, the scheme is expected to create jobs, strengthen supply chains and support a globally competitive manufacturing base under Viksit Bharat @2047.
China dominates the global rare earths market, accounting for 68.6 per cent of worldwide output. Its export controls and periodic supply slowdowns have created significant disruptions, causing Indian companies to face months-long delays in securing licences.
The 2020 pandemic underscored the supply chain risk of dependence on a single country for critical materials.
India’s push to build its rare earth sector
India holds 6.27 per cent of global rare earth reserves but produces only 0.83 per cent of global output, according to an EY report.
To expand capacity, the government launched the National Critical Mineral Mission, under which the Geological Survey of India will undertake 1,200 exploration projects between FY25 and FY31.
The Atomic Minerals Directorate is surveying coastal and river sands for new deposits, while state-run IREL Limited has been tasked with producing high-purity rare earth oxides from monazite to reduce import dependence.
[The Business Standard]
