India approves Rs 7,280 crore rare earth magnets scheme to cut import reliance

India on Wednesday approved a 72.8 billion rupees ($815.74 million) programme to promote manufacturing of rare earth permanent magnets, aiming to reduce dependence on imports for materials critical to electric vehicles, aerospace, defence, renewable energy, and electronics.

The Union Cabinet cleared the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPMs), with a total financial outlay of Rs 7,280 crore. This includes sales-linked incentives of Rs 6,450 crore for five years and a capital subsidy of Rs 750 crore for establishing 6,000 metric tons per annum (MTPA) of manufacturing capacity.

India currently meets almost all its rare earth permanent magnet demand through imports. The country imported 53,748 metric tons of rare earth magnets in the fiscal year ending March 2025. Consumption is expected to double by 2030.

Information Minister Ashwini Vaishnaw said the programme is designed to significantly cut reliance on overseas suppliers. “Right now, all permanent magnets used in the country are imported from somewhere … with the completion of this programme and the establishment of new plants, our import dependence will practically reduce to zero,” he told reporters after the Cabinet meeting.

The heavy industries ministry said the scheme will support the setting up of facilities with a total capacity of 6,000 MTPA, which will be allocated to five beneficiaries through a global competitive bidding process. Each entity can be allotted up to 1,200 MTPA.

Vaishnaw also said rare earth magnets are currently sourced from countries including China and Japan that have agreements with India. “All the countries with which we have agreements, it comes from those countries. Whether it is from China, whether it is from Japan, whether it is from Vietnam, Australia, Canada, and some US manufacturing is also being revised. It comes from all these places for the immediate requirement,” he said.

He noted that the annual requirement of REPMs in India is around 4,000 MTPA and that the country plans to export surplus output once domestic production begins. The new manufacturing entities are expected to be set up in two to three years.

China earlier this year implemented stricter export licensing on rare earth elements such as terbium and dysprosium, which are key inputs for high-performance NdFeB magnets used widely in consumer electronics and automobiles.

Vaishnaw added that India has an estimated 6.9 million tonnes of rare earth element reserves spread across coastlines and old mountain ranges.

(With inputs from agencies)