By Kavita Mistry 
The government of India is currently in final stages of launching a ₹7,350 crore scheme aimed at boosting domestic production of sintered rare earth permanent magnets (REPMs) to reduce reliance on imports. This move comes as a response and initiative to tackle China’s restrictions on REPM exports in April, which impacted our automobile and electronic sector.
India Plans 7-Year Scheme to Build Rare Earth Magnet Ecosystem
Likely titled to be “Scheme to Promote Sintered Rare Earth Permanent Magnet Manufacturing in India”, the scheme is expected to run for 7 years and establish and indigenous manufacturing ecosystem with a production capacity of up to 6,000 tonnes annually.
Targeting critical sectors which rely heavily on NdFeB (neodymium-iron-boron) magnets, including automobiles, electronics, wind energy, and defence, the focus of the scheme is on developing the entire value chain which includes the conversion of the NdPr oxide into sintered NdFeB magnets.
At the moment, our nation lacks the lacks the infrastructure as well as the technology to handle the final stages of REPM manufacturing, which includes – converting rare earth oxide to metal, metal to alloy, and alloy to magnet.
The proposed scheme will incentivize facilities capable of these processes.
Govt to Support 5 REPM Units with Incentives; Bidding to Follow Least-Cost Model
5 integrated REPM manufacturing units, each with a capacity of 1,200 tonnes per annum are planned to be supported by the government. With the increments of 100 tonnes, a minimum bid of 600 tonnes and a maximum of 1,200 tonnes per annum can be made by the applicants.
The firms that are in turn selected shall be eligible for 2 types of financial support – sales-linked incentives based on magnet sales and capital subsidies to offset the high setup costs of integrated manufacturing units.
The domestic demand currently is estimated at 4,010 tonnes annually, and the same is expected to nearly double to 8,220 tonnes by 2030. Presently, almost all of the REPMs is imported by us.
The scheme includes a two-year gestation period to set up facilities, with production ramping up to the target capacity over five years. A transparent Least Cost System shall be followed for the bidding process, which basically means that the firm that shall be quoting the lowest sales incentives shall be selected.
India’s limited domestic supply of NdPr oxide, primarily produced by Indian Rare Earths Ltd (IREL), will require manufacturers to source additional raw materials independently. The Ministry of Heavy Industries (MHI) will oversee the scheme’s implementation, and an inter-ministerial committee will monitor progress and ensure deadlines are met. The scheme will operate separately from other government programs, such as the production-linked incentives for the automobile sector.
Summary
The government of India is launching a 7-year scheme worth ₹7,350 crores to boost the domestic production of sintered rare earth permanent magnets (REPMs), reducing import dependence amid China’s export restrictions. The plans include the extension of support to 5 manufacturing plants, which would target critical sectors like automobiles and defence, with incentives and a least-cost bidding system. The overall scheme shall be overseen by the Ministry of Heavy Industries and the Production capacity is aimed to reach 6,000 tonnes annually.