Centre notifies Rs 7,280-cr plan to reduce import dependence on rare earth magnets

The Centre has notified the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnet (REPM) with a total outlay of Rs 7,280 crore, aimed at strengthening domestic manufacturing and reducing India’s dependence on China for critical inputs.

The initiative targets securing supply chains for key sectors such as electric vehicles (EVs), electronics, aerospace and green energy. The scheme had earlier received approval from the Union Cabinet.

According to the notification, the scheme aims to build a complete domestic value chain, starting from the conversion of rare earth oxides into sintered Neodymium-Iron-Boron (NdFeB), which are among the strongest types of permanent magnets and are considered essential for India’s strategic and industrial advancement.

“Through this scheme, the Government of India intends to incentivise setting up of 6,000 MTPA (Million Tonnes Per Annum) of integrated REO (rare earth oxides) to sintered NdFeB REPM’s manufacturing facilities in the country,” the Heavy Industries Ministry said

Under the scheme, indigenously produced sintered NdFeB REPMs manufactured from NdPr oxide will be eligible for sales-linked incentives as well as capital subsidy support.

The government will allocate up to 6,000 MTPA of integrated sintered NdFeB magnet manufacturing capacity to five applicants through a transparent bidding process conducted via a Global Tender Enquiry (GTE) by issuing a Request for Proposal (RFP).

As per the notification, the minimum manufacturing capacity allocation to a beneficiary will be 600 MTPA, while the maximum allocation will be capped at 1,200 MTPA. Allocations will be made in multiples of 100 MTPA.

Beneficiaries under the scheme will receive sales-linked incentives on the sale of sintered NdFeB REPMs and capital subsidy support for setting up the allocated manufacturing capacity.

Further, three selected beneficiaries with the lowest bids will receive an assured limited supply of NdPr oxide from IREL (India) Ltd, a Central Public Sector Enterprise (CPSE) under the Department of Atomic Energy (DAE).

The total duration of the scheme will be seven years, including a two-year gestation period for setting up manufacturing facilities and five years for the disbursement of sales-linked incentives on the sale of sintered NdFeB REPMs.

In cases where the first sale of sintered NdFeB REPM begins before the completion of the gestation period, the additional period will also be eligible for sales-linked incentives over and above the five-year incentive duration.

India has one of the world’s largest reserves of rare earth elements, largely located in coastal regions. IREL (India) Ltd, a CPSE under the Department of Atomic Energy, is currently the only company in the country engaged in the mining of rare earth ores and their refining into rare earth oxides.

While India has upstream capabilities in mining, separation and oxide refining, there remains a gap in industrial-scale midstream capabilities required for oxide-to-metal, metal-to-alloy and alloy-to-magnet conversion. As a result, India currently imports its entire requirement of sintered NdFeB REPMs for downstream applications.