Cabinet Approves ₹7,280 Crore Scheme to Boost Rare Earth Magnet Manufacturing

In a major policy push towards industrial self-reliance, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a ₹7,280 crore scheme to promote domestic manufacturing of Sintered Rare Earth Permanent Magnets (REPMs). This is the first-ever initiative of its kind in India aimed at establishing an integrated REPM manufacturing ecosystem, thereby reducing dependency on imports, boosting high-tech industries, and supporting India’s Net Zero 2070 commitment.

What Are Rare Earth Permanent Magnets (REPMs)?

REPMs are among the strongest permanent magnets available today. They are essential components in modern technologies, including,

• Electric vehicles (EVs)
• Wind turbines and renewable energy systems
• Aerospace and defence equipment
• Industrial automation
• Consumer electronics

Despite the strategic importance of REPMs, India currently imports nearly all of its requirements, mainly from China and other international sources. The new scheme is a decisive move to develop indigenous capabilities in this critical sector.

Key Features of the ₹7,280 Crore REPM Scheme

Objective

The goal is to set up manufacturing capacity of 6,000 Metric Tons Per Annum (MTPA) of sintered REPMs within India. This includes the complete value chain,

• Conversion of rare earth oxides to metals
• Metals to high-performance alloys
• Alloys to finished REPMs

Financial Structure

The scheme will operate under a ₹7,280 crore outlay structured as follows,

• ₹6,450 crore in sales-linked incentives over five years
• ₹750 crore in capital subsidy to establish the facilities

Beneficiary Selection

The capacity will be divided among five selected beneficiaries through a global competitive bidding process. Each company can be allotted up to 1,200 MTPA.

Scheme Duration

The scheme spans 7 years, including,

• 2-year gestation period for setting up infrastructure
• 5 years of incentive disbursement based on actual REPM sales

Enhancing Self-Reliance in High-Tech Manufacturing

This scheme is aligned with Atmanirbhar Bharat Abhiyan, aiming to eliminate import dependence for critical components like REPMs used in EVs, drones, defence systems, and renewable energy installations.

It supports the creation of a fully integrated REPM manufacturing base within India for the first time, enhancing technological capabilities and supply chain resilience.

Strengthening Strategic Sectors

By ensuring a steady domestic supply of REPMs, the scheme will directly benefit several key sectors,

• Electric Mobility: Powering motors in EVs
• Defence & Aerospace: Used in radar systems, guided missiles, and aircraft
• Renewable Energy: Enabling efficient wind turbine operation
• Consumer Electronics: Found in headphones, speakers, hard drives, etc.

Static Facts

• Scheme Name: Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets
• Approval Date: 26 November 2025
• Total Outlay: ₹7,280 crore
• Incentive Components: ₹6,450 crore (sales-linked), ₹750 crore (capital subsidy)
• Capacity Target: 6,000 MTPA of sintered REPMs
• Number of Beneficiaries: 5
• Duration: 7 years (2-year gestation + 5-year incentives)