Cabinet Set to Approve ₹7,000 Crore Rare-Earth Scheme to Boost Domestic Magnet Production: Report

New Delhi — The Union Cabinet is poised to grant approval to a major new government initiative — a ₹7,000–7,300 crore scheme aimed at boosting India’s domestic production of rare-earth permanent magnets (REPMs), according to multiple media reports.

The proposed scheme, under the aegis of the Ministry of Heavy Industries, marks a significant escalation of prior plans. Initially envisaged at ₹1,345 crore, the outlay was raised to ₹5,000 crore and has now ballooned to over ₹7,300 crore to meet ambitious production goals and reduce India’s reliance on imports — particularly from China.

According to official sources, the scheme will facilitate the setting up of integrated magnet-manufacturing facilities, covering the entire value chain — from rare-earth oxide conversion to finished sintered magnets used in sectors such as electric vehicles (EVs), renewable energy, electronics, and defense.

Under the plan, the government will offer two forms of support: a capital subsidy to help offset high investment costs, and sales-linked incentives to make domestic magnet production economically viable.

If implemented, the scheme is expected to help establish up to five major magnet-manufacturing units, each with an annual capacity of up to 1,200 tonnes. The cumulative production target is set at around 6,000 tonnes per year — a substantial jump compared to current domestic capacity.

The push comes at a critical time. After China imposed export curbs on rare-earth materials and magnets earlier this year, global supply chains — especially for EV motors and green-energy technologies — were severely disrupted.

By localizing magnet production, India aims not only to secure its supply of critical components but also to reduce import dependence, lower production costs for downstream industries, and bolster the “Make-in-India” ecosystem for clean energy and advanced manufacturing.

Officials familiar with the matter say that once the Cabinet nod is granted, detailed guidelines will be issued and companies — both public and private — can begin bidding for setting up the magnet units under a production-linked incentive (PLI) model.

The move is widely seen as a strategic shift, aimed at positioning India as a global player in rare-earth magnet manufacturing, crucial for the country’s electric vehicle, electronics, and defence ambitions in the coming decade.