India earmarks €703 million for rare-earth magnet production

The Indian government has announced a new scheme to promote the manufacturing of sintered rare earth permanent magnets (REPMs) with an allocation of 72.8 billion rupees (around €703.7 million). The programme aims to reduce import dependence and build a more resilient domestic supply chain.

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Of the total financial outlay of 72.8 billion rupees (€703 million), the government will allocate 7.5 billion rupees (around €72.5 million) towards capital subsidies for setting up REPM plants and 64.5 billion rupees (around €623.5 million) towards sales-linked incentives disbursed over five years. It has yet to disclose the allocation of the remaining 800 million rupees (around €7.7 million).

The new scheme paves the way for India’s first integrated REPM manufacturing facilities, with a high degree of localisation across the value chain, from rare earth oxides through metals and alloys to finished magnets. The government has set a target of localising annual production of 6,000 tonnes of REPMs.

Through a bidding process, the government will select five companies to set up these factories and allot each up to 1,200 tonnes of capacity. Following government approval, the selected companies will have seven years under the scheme, including two years to establish the manufacturing facilities and five years to earn incentives based on sales.

While some companies are developing rare-earth-magnet-free components, the majority of high-tech and green industries still rely heavily on REPMs. The government expects them to remain vital for the EV, renewable energy, electronics, aerospace and defence sectors and projects their demand to double by 2030 compared with 2025 levels.

In FY2025 (April 2024–March 2025), India imported 53,748 tonnes of rare earth magnets, nearly double the FY2024 (April 2023–March 2024) volume, which stood at 28,700 tonnes. At present, the country largely relies on imports of REPMs from China, which makes its automotive and other key manufacturing industries vulnerable to supply chain disruptions.

Earlier this year, Chinese export restrictions on certain key rare earth elements and related products, including magnets, forced several EV makers in India to cut production. China started granting conditional licences to a handful of Indian companies in October, yet supply risks persist at a broader level, making localisation a key priority for the government.

pib.gov.in