Govt plans Rs 5,000 crore boost to rare earth magnet scheme

Government to ramp up rare earth magnet scheme with ₹5,000 crore outlay, quadrupling output target to 6,000 MT. The push aims to strengthen domestic manufacturing, attract more industry players, and cut import reliance for EVs, wind turbines, defence, and electronics.

The Indian government is set to significantly scale up its rare earth magnet manufacturing scheme, increasing the outlay to more than ₹5,000 crore and quadrupling the annual production target from 1,500 metric tonnes (MT) to around 6,000 MT. The move seeks to bolster domestic manufacturing, attract greater industry participation, and cut India’s heavy reliance on imports for electric vehicles (EVs), wind turbines, defence systems, and electronics.

Rare earth permanent magnets are critical components in high-performance electric motors and advanced industrial applications. Their secure supply is strategically important for India’s ambitions in renewable energy, clean mobility, and national security.

Expanded Incentives and Broader Industry Participation
Initially planned with an allocation of ₹1,350 crore and focused on just two manufacturers, the scheme has now been revised to include at least five players. Each will be eligible for incentives on production of up to 1,200 MT annually, ensuring wider participation and reduced risk of project concentration.

Officials say the revised structure was shaped following inputs from the Prime Minister’s Office (PMO), which recommended expanding the scheme to accommodate multiple companies. “By increasing the outlay and expanding participation, the government hopes to become self-reliant in this strategically important segment,” an official said.

The scheme, expected to run for seven years, will be open to both public and private sector entities capable of end-to-end magnet production. Stakeholder consultations saw participation from major industrial groups such as JSW Group, Mahindra Group, Kalyani Group, Sona Comstar, Midwest Advanced Materials, Entellus, and Proterial, among others.

Meeting Rising Domestic Demand
Domestic demand for rare earth magnets is currently estimated at about 4,000 MT per year and is projected to double by 2030, driven largely by the rapid adoption of EVs, renewable energy solutions, and advanced electronics. With the revised 6,000 MT output target, India aims to meet future demand while also mitigating exposure to global supply chain disruptions, particularly given China’s dominance in rare earth processing and magnet production.

Resource Potential vs. Current Production
India holds an estimated 6.9 million MT of rare earth reserves but mined only about 2,900 MT in 2024. In stark contrast, rare earth magnet imports surged to 53,000 MT in FY25, highlighting the extent of dependency. At present, IREL (India) Ltd is the sole public sector entity involved in rare earth mining and refining.

By expanding domestic capacity and incentivising new players, the government hopes to not only bridge the import gap but also develop an integrated rare earth value chain from mining to finished magnet production.

This ambitious expansion aligns with India’s strategic manufacturing goals under Atmanirbhar Bharat and is expected to create a globally competitive ecosystem for rare earth materials—crucial for powering the next generation of energy, mobility, and defence technologies.