In a major step towards reducing dependence on imports and strengthening India’s position in advanced manufacturing, the Union Cabinet has approved an incentive scheme of ₹7,280 crore to promote domestic production of rare earth permanent magnets. The initiative aims to establish a strong end-to-end supply chain for critical minerals that fuel high-technology sectors such as electric vehicles (EVs), electronics, renewable energy, aerospace and defence.
The scheme, which will be valid for seven years, includes an initial period of two years for setting up integrated rare earth magnet production facilities and a five-year incentive disbursement linked to sales output. This is expected to enable creation of approximately 6,000 tonnes annual production capacity of rare earth magnets within the country.
With heavy dependence on imports – primarily from China – India’s magnet processing and refining ecosystem has remained underdeveloped for a long time. The newly approved policy framework aims to attract global and domestic investors, encourage value addition within India and secure access to essential strategic inputs for emerging industries. The Finance Ministry has already approved the proposal, allowing the Cabinet to move ahead with the decision.
By boosting capabilities in critical minerals processing and magnet manufacturing, the scheme aligns with the government’s larger mission of creating resilient supply chains, advancing Make-in-India manufacturing and promoting technological self-reliance.