India's Cabinet Approves Rs 7,200 Crore Scheme for Rare Earth Magnets

In a significant move to bolster India's rare earth manufacturing sector, the Union Cabinet, led by Prime Minister Narendra Modi, has approved a Rs 7,200 crore scheme focused on the production of Rare Earth Permanent Magnets (REPM). This initiative aims to establish integrated manufacturing facilities capable of producing 6,000 Metric Tons per Annum (MTPA) of these magnets, which are vital for various high-tech applications.

Rare Earth Permanent Magnets are among the most powerful magnets available and are crucial components in several industries, including electric vehicles, renewable energy, electronics, aerospace, and defence. Currently, India relies heavily on imports, particularly from China, for its REPM requirements. This new scheme represents a strategic effort to enhance self-sufficiency and expand India's presence in the global market for these essential materials.

The approved plan includes a substantial investment of Rs 6,450 crore in sales-linked incentives aimed at boosting REPM sales over a five-year period. Additionally, Rs 750 crore has been allocated as a capital subsidy for the establishment of the planned production facilities.

During the announcement, Ashwini Vaishnaw, Minister of Information and Broadcasting, highlighted the initiative's strategic significance, stating, "This is a very important, strategic decision." He noted that India possesses one of the largest deposits of rare earth elements globally, which could underpin the success of this initiative.

Key Features of the Rare Earth Permanent Magnets Scheme

The initiative is designed to reduce India's reliance on imported REPMs and is a crucial part of the country’s broader strategy to secure supply chains for essential minerals while fostering domestic technological capabilities in emerging industrial sectors.

To promote the manufacturing of sintered Rare Earth Permanent Magnets, the scheme includes the following key components:

• Focus on the entire value chain: The scheme encompasses integrated manufacturing facilities that will convert rare earth oxides into metals, then into alloys, and finally into finished REPMs.
• Total Investment: Rs 7,280 crore.
• Production Capacity: The initiative aims to create a manufacturing capacity of 6,000 MTPA, distributed among five production units, each with a capacity of 1,200 MTPA.
• Timeline: The overall duration of the scheme is set for seven years, which includes two years allocated for the establishment of the manufacturing units, followed by five years for sales incentives.

According to projections, India's consumption of REPMs is expected to double by 2030 compared to 2025 levels. This increase is anticipated due to rising demand in sectors such as electric vehicles, renewable energy, industrial manufacturing, and consumer electronics.

The scheme will employ a competitive bidding process to allocate the total manufacturing capacity among the selected participants, ensuring that each recipient can efficiently meet the anticipated demand. By developing local production capabilities, the initiative aims to secure a reliable supply chain for national industries and contribute to India's commitment to achieving Net Zero carbon emissions by 2070.