India is preparing to launch a ₹7,300-crore incentive scheme to establish a fully indigenous ecosystem for rare-earth permanent magnet manufacturing. The proposal, aimed at reducing dependence on imports and building domestic capability in critical materials, has received approval from the Finance Ministry’s Expenditure Finance Committee (EFC). It will soon be placed before the Union Cabinet led by Prime Minister Narendra Modi for final clearance.
The initiative is designed to create a rare earth magnet production ecosystem with an annual capacity of up to 6,000 tonnes. It marks a major policy push toward self-reliance in advanced manufacturing — a key part of India’s “Atmanirbhar Bharat” and “Make in India” goals.
Scheme Details: ₹6,500 Crore for Capital and ₹800 Crore for Operations
According to officials, the ₹7,300-crore proposal includes ₹6,500 crore for capital expenditure and ₹800 crore for operational expenditure. The funds will be used to set up rare earth magnet processing units and build a strong supply chain within India.
This funding aims to support both government and private players in establishing facilities capable of producing high-quality magnets essential for modern technology. The move is expected to encourage public-private partnerships, innovation, and technology development in the rare earth sector.
Officials say the scheme is a first-of-its-kind in India and could become a major milestone in the country’s journey toward building a strategic and self-reliant industrial base.
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China’s Export Curbs Spark India’s Policy Response
The decision to roll out this scheme follows China’s export restrictions on several rare earth elements and finished magnets earlier this year. China, the global leader in rare earth production, imposed new rules in April that require exporters to obtain licenses and declare the end-use of exported materials. These declarations also ensure that the materials are not used for defense purposes or re-exported to the United States.
This tightening of export controls by China raised global concerns about supply security, especially for industries dependent on rare earth materials. India’s planned scheme is a strategic response to such challenges, ensuring the country is less vulnerable to supply disruptions and can support its growing industrial demand independently.
Importance of Rare Earth Magnets
Permanent magnets made from rare earth elements (REEs) are vital components in numerous industries. They are used in electric vehicles, renewable energy systems, wind turbines, power windows, and speakers, as well as in various high-performance machines.
By establishing a domestic ecosystem, India aims to reduce import dependency, cut costs, and strengthen supply chains for key sectors like automotive, electronics, renewable energy, and defense.
These magnets are also critical for the electric vehicle (EV) revolution and for achieving India’s clean energy targets. A strong domestic base will help India capture a larger share of global manufacturing linked to the green economy.
Towards Self-Reliance and Strategic Growth
Once approved by the Cabinet, the scheme will serve as a cornerstone in India’s industrial policy. It is expected to attract significant investments, both domestic and foreign, into the rare earth and advanced materials sectors.
Officials believe this move will position India as a regional hub for rare earth magnet production, generate employment opportunities, and promote cutting-edge research and development.
By investing strategically in this area, India is not only safeguarding its future supply chains but also stepping up as a global player in the advanced manufacturing ecosystem.
This ₹7,300-crore initiative could be a turning point in India’s journey toward becoming a self-reliant technology powerhouse.
