India Moves to Approve ₹7,000 Crore Scheme for Rare Earth Magnets

The Union Cabinet of India is preparing to approve a substantial ₹7,000 crore incentive scheme aimed at significantly enhancing the domestic production of rare earth magnets. These components are vital for various sectors, including electric vehicles, defence, and renewable energy. The scheme is expected to be officially sanctioned on November 26, 2025.

This initiative is designed to reduce India’s reliance on imports of critical minerals, particularly rare earth elements, which are predominantly sourced from China. By fostering local manufacturing, the plan aims to establish a production capacity of approximately 6,000 tonnes of rare earth magnets, thereby strengthening India’s supply chains in advanced manufacturing sectors.

Incentives for Domestic Production

According to sources, companies that invest in the domestic manufacturing of rare earth magnets will receive incentives based on their production volumes and sales. The proposed scheme, which has a validity of seven years, is part of a broader strategy by the Indian government to secure critical mineral supply chains and enhance technological self-reliance in emerging industries.

The Finance Ministry has reportedly given its approval for the scheme, facilitating discussion during the ongoing Cabinet meeting, which commenced at 12:30 PM. The Ministry of Mines has been developing the framework for this initiative, focusing on attracting both global and domestic firms while promoting value addition within India.

Long-Term Goals and Challenges

The Indian economy currently faces challenges due to its heavy dependence on imports for rare-earth permanent magnets. The proposed incentive mechanism aims to bolster investment in the processing, refining, and magnet-making capabilities that are currently underdeveloped in the country. This move aligns with the government’s objectives of enhancing local manufacturing capabilities and ensuring the long-term availability of strategic materials.

As the Cabinet’s decision approaches, significant attention is on how this scheme will impact India’s position in the global market for critical minerals, especially in light of the increasing demand for sustainable technologies and defence applications. The approval of the ₹7,000 crore scheme is anticipated to be a pivotal step in solidifying India’s role as a competitive player in the rare earth magnet industry.