India clears ₹7,280-crore scheme to boost domestic rare earth magnet manufacturing

The Union Cabinet on Wednesday approved a ₹7,280-crore scheme to promote domestic manufacturing of Rare Earth Permanent Magnets (REPM), a critical component for electric mobility, renewable energy, electronics, aerospace and defence. The scheme to promote manufacturing of sintered rare earth permanent magnets” was cleared at a meeting chaired by Prime Minister Narendra Modi.

REPM 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 scheme aims to create capacity of 6,000 MTPA (metric tonne per annum),” Information and Broadcasting Minister Ashwini Vaishnaw told reporters.

Rare earth magnets are used in major industries including electric vehicles, aerospace, electronics, medical devices and defence.

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.

At present, India’s demand for REPMs is met primarily through imports. With this initiative, India will establish its first ever integrated REPM manufacturing facilities, generating employment, strengthening self-reliance and advancing the nation’s commitment to achieve Net Zero by 2070.

“The total financial outlay of the scheme is Rs.7280 crore, comprising a sales-linked incentives of Rs. 6450 crore on REPM sales for five (5) years and capital subsidy of Rs.750 crore for setting up an aggregate of 6,000 MTPA of REPM manufacturing facilities,” the government said in a statement.  

The scheme envisions allocating the total capacity to five beneficiaries through a global competitive bidding process. Each beneficiary will be allotted up to 1,200 MTPA of capacity.

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.

With inputs from agencies