Union Cabinet approves ₹7,280-crore scheme to manufacture rare earth magnets in India

In yet another push to secure India’s supplies of rare earth magnets, the Union Cabinet on Wednesday (November 26, 2025) approved a new “first-of-its-kind” scheme, with a financial outlay of ₹7,280 crore, to manufacture Rare Earth Permanent Magnets (REPM) in India. 

The approval of this scheme, named the ‘Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets’, comes two days after Commerce Minister Piyush Goyal specifically noted that one of the areas in which India and Canada have “tremendous potential” to cooperate on was in critical minerals. This was in the context of the two countries restarting talks on a Comprehensive Economic Partnership Agreement.

“This first-of-its-kind initiative aims to establish 6,000 metric tonnes per annum (MTPA) of integrated Rare Earth Permanent Magnet (REPM) manufacturing in India, thereby enhancing self-reliance and positioning India as a key player in the global REPM market,” the government said in a release following the Union Cabinet’s decision. 

REPMs are vital components that have applications in electric vehicles, renewable energy, electronics, aerospace, and defence sectors. According to the government, the scheme will support the creation of integrated REPM manufacturing facilities, involving the conversion of rare earth oxides to metals, metals to alloys, and alloys to finished REPMs.

“This initiative is a significant step toward building a resilient and stable supply chain, particularly for components and sub-assemblies essential for the production of electrified vehicles,” Shailesh Chandra, President of the Society of Indian Automobile Manufacturers (SIAM) said. 

“The scheme is expected to accelerate adoption of clean mobility solutions and support India’s broader sustainability goals,” Mr. Chandra added. “By strengthening indigenous manufacturing capabilities, it will contribute to reducing carbon emissions and lowering dependence on crude oil imports, further enhancing the nation’s energy security.”

The total financial outlay of the scheme of Rs 7280 crore will comprise a sales-linked incentives of Rs 6,450 crore on REPM sales for five years and a capital subsidy of Rs 750 crore for the setting up of an aggregate of 6,000 MTPA of REPM manufacturing facilities.

The plan is to allocate the total capacity of 6,000 MTPA to five beneficiaries through a global competitive bidding process with each beneficiary being allotted up to 1,200 MTPA of capacity.

The total duration of the scheme is to be seven years from the date of award, including a 2-year gestation period for setting up an integrated REPM manufacturing facility, and 5 years for incentive disbursement on the sale of REPM.