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Government Clears Rs 7,280 Crore Initiative to Build Domestic Rare Earth Magnet Manufacturing

The Government of India has approved a Rs 7,280 crore scheme aimed at establishing a strong domestic manufacturing ecosystem for sintered rare earth permanent magnets (REPM), a critical component for several strategic and high-growth industries.

The initiative focuses on NdFeB (neodymium-iron-boron) magnets, which are among the most powerful commercially available magnets and are essential for applications in electric vehicles, renewable energy systems, consumer electronics, defence, and aerospace. These magnets primarily use rare earth elements such as neodymium (Nd), praseodymium (Pr), and samarium (Sm).

A key objective of the scheme is to develop an end-to-end manufacturing value chain within India—covering rare earth oxides (NdPr oxide), metal and alloy processing, and finished magnet production. By doing so, the government aims to reduce import dependence while strengthening India’s industrial resilience and strategic supply security.

India currently possesses substantial upstream capabilities in rare earth mining, separation, and oxide processing, largely through IREL (India) Limited, a central public sector undertaking under the Department of Atomic Energy. IREL has an annual capacity of 400 metric tonnes of NdPr oxide, which can support approximately 1,200 metric tonnes per annum (MTPA) of integrated NdFeB magnet production. In addition, the company maintains a stockpile of around 500 metric tonnes of NdPr oxide, enabling support for nearly 1,500 MTPA of REPM output. However, the absence of large-scale downstream facilities for metal, alloy, and magnet manufacturing has created a gap that this scheme seeks to address.

Through a transparent global tender process, the scheme will allocate up to 6,000 MTPA of integrated NdFeB magnet manufacturing capacity among five selected entities. Each beneficiary will receive a minimum allocation of 600 MTPA, with capacities awarded in multiples of 100 MTPA up to a maximum of 1,200 MTPA. Financial support includes production-linked incentives based on output and a capital subsidy of 15 percent on eligible investments such as plant and machinery, utilities, research and development, product design, and technology transfer.

As part of the arrangement, IREL will supply 500 MTPA of NdPr oxide to the first three beneficiaries, while the remaining raw material requirements will need to be secured independently by the selected manufacturers. Performance bank guarantees, linked to allocated capacity, will be mandatory to ensure timely implementation and adherence to scheme conditions.

The scheme will run for seven years, comprising a two-year testing phase followed by five years of production-linked incentives. An extension may be considered if the testing phase is completed ahead of schedule. Implementation and oversight will be carried out by an inter-ministerial Scheme Monitoring Committee, supported by a Technical Committee and a Project Management Agency responsible for digital portals, incentive processing, audits, project tracking, and reporting.

Strict milestones related to investment levels, production targets, and timelines have been set. Failure to comply with the scheme’s requirements or any misrepresentation may lead to withdrawal of incentives, cancellation of approvals, and recovery of disbursed funds. Overall, the programme is expected to significantly enhance India’s self-reliance in rare earth magnet manufacturing, a sector of growing industrial and strategic importance.