Context
The Union Budget 2026–27 announced the establishment of dedicated Rare Earth Corridors in four coastal states to strengthen India’s critical minerals ecosystem, reduce import dependence, and support clean-energy and high-technology manufacturing.
Introduction
The Government has approved the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets with a financial outlay of ₹7,280 crore. The scheme aims to set up an integrated manufacturing capacity of 6,000 metric tonnes per year in India, covering the entire process from rare-earth oxides to finished magnets.
By creating a domestic, end-to-end ecosystem, the initiative seeks to reduce dependence on imports of this critical input used in electric vehicles, renewable energy systems, electronics, aerospace, and defence. It also aims to strengthen self-reliance, ensure more secure supply chains for strategic sectors, and support national goals such as Atmanirbhar Bharat and India’s long-term Net Zero 2070 vision.
What is Rare Earth Permanent Magnet (REPM)?
REPMs are amongst the strongest types of permanent magnets and are used extensively in technologies requiring compact and high-performance magnetic components. Their high magnetic strength and stability make them integral to:
- Electric vehicle motors
- Wind turbine generators
- Consumer and industrial electronics
- Aerospace and defence systems
- Precision sensors and actuators
The ability of REPMs to deliver strong magnetic performance at small sizes makes them essential for advanced engineering applications. As India expands manufacturing across priority sectors such as clean energy, advanced mobility and defence, establishing a reliable domestic supply of high-performance magnets becomes increasingly important for long-term competitiveness and supply-chain resilience.
India’s Current Landscape and Need for the Scheme
India has large reserves of rare-earth minerals, especially monazite, found in both coastal and inland areas. About 13.15 million tonnes of monazite deposits have been identified, containing nearly 7.23 million tonnes of rare-earth oxides. These deposits are found in beach sands, red/teri sands, and inland alluvial areas across states such as Andhra Pradesh, Odisha, Tamil Nadu, Kerala, West Bengal, Jharkhand, Gujarat, and Maharashtra. These rare-earth oxides are the basic raw material needed for industries like permanent magnet manufacturing.
Apart from this, around 1.29 million tonnes of rare-earth oxide resources have been identified in hard-rock regions of Gujarat and Rajasthan. The Geological Survey of India has also discovered an additional 482.6 million tonnes of rare-earth ore resources through extensive exploration. Together, these findings show that India has enough raw materials to support rare-earth–based industries, including the production of rare-earth permanent magnets.
Despite this strong resource base, India’s domestic production of permanent magnets is still limited, and a large share of current demand is met through imports. Official trade data shows that between 2022–23 and 2024–25, China supplied most of India’s permanent magnet imports, accounting for about 60% to 81% of the value and nearly 85% to 90% of the quantity imported.
Looking ahead, demand for rare-earth permanent magnets in India is expected to double by 2030 due to the rapid growth of electric vehicles, renewable energy, electronics manufacturing, and strategic sectors. To meet this rising demand and reduce import dependence, developing an integrated domestic manufacturing capacity for these magnets is essential for building a strong and resilient supply chain.
Core Elements of the Scheme
The scheme establishes a comprehensive framework for end-to-end REPM manufacturing in India, supporting both initial capacity creation and long-term competitiveness.
- It aims to build a fully integrated production ecosystem for high-performance magnetic materials, creating 6,000 MTPA of domestic manufacturing capacity, from oxide feedstock to final product.
- The total capacity will be distributed among up to five beneficiaries through a global competitive bidding process, with each beneficiary eligible for up to 1,200 MTPA, ensuring diversification along with adequate scale.
- The scheme includes a strong incentive structure, with ₹6,450 crore earmarked as sales-linked incentives for REPM production over five years.
- A ₹750 crore capital subsidy will support the establishment of advanced, integrated REPM manufacturing facilities.
- The scheme will be implemented over seven years, comprising a two-year gestation period for setting up the integrated REPM facilities followed by five years of incentive disbursement linked to REPM sales. This structured timeline is intended to support timely capacity creation and provide stability during the initial production and market-development phase.
National Priorities and Alignment with Broader Government Initiatives
The establishment of domestic REPM manufacturing capacity supports several national priorities, as these magnets are essential for strategic and high-technology sectors that are central to India’s industrial and technological advancement. The Governments’ initiative aims to strengthen domestic production, enhance supply-chain resilience for rapidly expanding industries while also contributing to India’s long-term sustainability goals.
- Rare-earth magnets are widely used in energy-efficient motors, wind-power systems and other green technologies, and the initiative therefore aligns closely with the country’s broader clean-energy transition and its Net Zero 2070 vision.
- Promoting domestic manufacturing of REPMs is equally relevant for national security and self-reliance. As these magnets are used in defence and aerospace systems, developing integrated production capability within the country contributes to secure access for critical applications and supports ongoing indigenization efforts.
- This also complements India’s broader focus on strengthening its critical minerals value chain through the National Critical Minerals Mission (NCMM), which aims to improve availability and processing capabilities for key minerals, including rare-earth elements utilised across advanced sectors.
- These linkages demonstrate that developing domestic REPM manufacturing capability is not only a technological imperative but also a key component of India’s strategy to advance self-reliance, accelerate clean-energy adoption, support advanced mobility, and strengthen defence and strategic manufacturing ecosystems.
- The REPM scheme further aligns with a wide set of ongoing government initiatives aimed at strengthening India’s critical mineral and advanced manufacturing ecosystem.
- Policy reforms, particularly the amendments to the Mines and Minerals (Development and Regulation) Act, 1957, introduced a dedicated list of critical and strategic minerals and empowered the Government to auction mining leases and composite licences, enhancing opportunities for both private and public-sector participation.
- Together, these initiatives, including the NCMM, regulatory reforms, and the REPM manufacturing scheme, create a strong domestic foundation for expanding REPM capacity and integrating it into India’s broader industrial, clean-energy and strategic priorities.
Global Context and India’s Opportunity
Global supply chains for rare-earth materials and permanent magnets have faced disruptions at different times, showing how important it is to have safe and diversified sources for these critical materials. Keeping this in mind, India has taken several steps to ensure long-term supply security through policy changes and focused efforts to build domestic capabilities.
The Ministry of Mines has signed agreements with mineral-rich countries such as Australia, Argentina, Zambia, Peru, Zimbabwe, Mozambique, Malawi, and Côte d’Ivoire to strengthen cooperation in the minerals sector. India is also part of international groupings like the Minerals Security Partnership, the Indo-Pacific Economic Framework, and the initiative on Critical and Emerging Technologies. These platforms aim to create stronger and more reliable supply chains for critical minerals.
Alongside this, Khanij Bidesh India Limited is working to secure strategic mineral resources abroad by exploring and acquiring assets, including lithium and cobalt, in partnership with countries like Argentina. Together, these efforts are central to India’s plan to secure key minerals needed for electric vehicles, renewable energy, electronics, and defence.
In this context, building domestic rare-earth permanent magnet manufacturing capacity gives India an important opportunity. It can help the country move up the global value chain in advanced materials, reduce vulnerabilities in supply, and support industrial growth within India.
Conclusion
The Scheme to promote manufacturing of Sintered Rare Earth Permanent Magnets (REPM) is designed to enhance competitiveness, attract technology-driven investment and support long-term scalability. It also contributes to India’s energy-transition goals, given the role of these materials in high-efficiency systems. By establishing domestic capability and strengthening downstream linkages, this Government’s initiative will help generate employment, deepen industrial capacity and support the vision of Atmanirbhar Bharat and Viksit Bharat @2047.
