Cabinet Approves Rs.7,280 Crore Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets

Government of India launches initiative to develop REPM ecosystem and enhance self-reliance

The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, approved the ‘Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets’ with a financial outlay of Rs.7,280 crore. This initiative, the first of its kind in India, aims to establish 6,000 Metric Tons per Annum (MTPA) of integrated Rare Earth Permanent Magnet (REPM) manufacturing, enhancing self-reliance and positioning India as a significant participant in the global REPM market.

Significance of REPMs and scheme objectives

REPMs are among the strongest types of permanent magnets and are essential for applications in electric vehicles, renewable energy, electronics, aerospace, and defence. The scheme will support the development of integrated REPM manufacturing facilities, covering the conversion of rare earth oxides to metals, metals to alloys, and alloys to finished REPMs.

Driven by increasing demand from electric vehicles, renewable energy, industrial applications, and consumer electronics, India’s REPM consumption is expected to double by 2030 compared to 2025. Currently, India relies primarily on imports to meet its REPM requirements. The scheme will establish the country’s first integrated REPM manufacturing facilities, generating employment, strengthening self-reliance, and contributing to the nation’s commitment to achieve Net Zero by 2070.

Financial structure and implementation

The total financial outlay of the scheme is Rs.7,280 crore, including Rs.6,450 crore in sales-linked incentives over five years on REPM sales and a capital subsidy of Rs.750 crore for establishing a cumulative 6,000 MTPA of REPM manufacturing facilities.

The scheme plans to allocate the total capacity to five beneficiaries through a global competitive bidding process, with each beneficiary receiving up to 1,200 MTPA of capacity. The total duration of the scheme is seven years from the date of award, including a two-year gestation period for setting up the facilities and five years for incentive disbursement based on REPM sales.

Impact on domestic manufacturing and strategic objectives

The initiative is aimed at strengthening the domestic REPM manufacturing ecosystem and enhancing global competitiveness. By promoting indigenous production capabilities, the scheme is expected to secure the REPM supply chain for domestic industries and support India’s Net Zero 2070 target. It reflects the government’s objective to build a technologically self-reliant, globally competitive, and sustainable industrial base in line with the vision of Viksit Bharat @2047.