The Indian government has recently approved a ₹7,280-crore scheme aimed at boosting domestic production of rare earth permanent magnets (REPMs). These magnets are vital components in various sectors, including electric vehicles (EVs), renewable energy systems, electronics, aerospace, and defence. Currently, China dominates this market, controlling over 90% of global REPM manufacturing and processing, which gives it substantial geopolitical leverage.
India is experiencing a surge in demand for REPMs, particularly due to its plans for large-scale expansion in renewable energy and electric mobility. The government forecasts that the consumption of magnets will double by 2030. However, India's dependence on imports for these magnets makes it vulnerable to external shocks and supply chain disruptions, especially highlighted by China's export controls in April 2025.
This scheme marks the beginning of a challenging yet necessary journey for India. The goal is to create an integrated manufacturing capacity of 6,000 metric tonnes per annum (MTPA) of REPMs, which will be allocated among five beneficiaries through a competitive bidding process. Each company can receive up to 1,200 MTPA.
Selected companies will benefit from substantial financial incentives, including:
This support is tailored to foster large-scale and commercially viable manufacturing operations.
The scheme emphasizes the production of sintered neodymium–iron–boron (NdFeB) magnets, known for their strength and widespread application. These magnets depend on both light and heavy rare earth elements for optimal performance, including:
The REPM production process involves several stages, including mining, beneficiation, processing, extraction, and refining. The new scheme will particularly support facilities that can execute the final stages of production from rare earth oxides to magnets.
In the fiscal year 2024–25, India imported over 53,000 tonnes of rare earth magnets, with more than 90% sourced from China. The new scheme aims to diminish this reliance and bolster domestic capabilities, though significant challenges remain.
Outside of China, only Japan and Vietnam have limited REPM manufacturing. China’s annual production stands at about 240,000 tonnes, far exceeding India's planned capacity under the new scheme, which underscores the existing gap in production capabilities.
While India produces some light rare-earth oxides, it lacks the ability to produce heavy rare-earth oxides essential for high-performance magnets. This gap necessitates continued imports of critical raw materials, impeding full self-reliance.
China’s dominance is rooted in its massive production scale and fully integrated supply chain, making its magnets significantly cheaper. Unless policy measures incentivize local purchases, Indian manufacturers may struggle against lower-priced imports.
Growing global concerns have led to initiatives aimed at reducing dependency on China, such as the Quad Initiative and the G7 Critical Minerals Action Plan, both emphasizing the importance of diversified supply chains.
Launched in January 2024, the National Critical Mineral Mission aims to secure India’s supply chain for critical minerals by enhancing domestic access, exploration, processing, and recycling capabilities, backed by an outlay of ₹16,300 crore.
India's REPM scheme signifies a pivotal step towards reducing dependence on China while fostering domestic production capabilities. However, overcoming challenges related to raw materials and cost competitiveness will be crucial for its success.
Q1. What is the purpose of India's REPM scheme?
Answer: The REPM scheme aims to enhance domestic production of rare earth permanent magnets, reducing India's reliance on China and boosting capabilities in critical sectors like EVs and renewable energy.
Q2. How much funding has been allocated for the REPM scheme?
Answer: The Indian government has allocated ₹7,280 crore to promote the domestic production of rare earth permanent magnets under this initiative.
Q3. What types of magnets does the scheme focus on?
Answer: The scheme primarily targets the production of neodymium–iron–boron (NdFeB) magnets, which are the strongest and most widely used rare earth magnets.
Q4. Why is India heavily reliant on rare earth imports?
Answer: India imports most of its rare earth magnets due to a lack of large-scale manufacturing capabilities and production of essential heavy rare earth oxides.
Q5. What international efforts are being made to secure critical minerals?
Answer: Global initiatives such as the Quad Initiative and the G7 Critical Minerals Action Plan aim to diversify supply chains and reduce dependence on China for critical minerals.
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