The Union Cabinet has approved a new initiative to expand the manufacturing of rare earth permanent magnets (REPMs), a significant component in Electric Vehicles, renewable energy and defence. The decision emerges amid China’s export controls on rare-earth magnet materials are set to increase the supply challenges for Indian industries.
The government has sanctioned a financial outlay of Rs.7,280 crore to establish 6,000 metric tonnes per year of fully integrated REPM manufacturing capacity in India. Now, this includes the entire process- from converting rare earth oxides into metals, turning metals into alloys, and finally producing finished magnets. Currently, almost all of India’s REPM needs are met through imports. As the demand is expected to double by 2030, the new initiative intends to secure supplies and develop a strong domestic ecosystem.
Incentives for Rare-earth magnets indicates a Broader national commitment
Raju Kumar, Partner and Energy Tax Leader, EY India, stated that the announcement of incentives for rare-earth magnets, along with allocations in the National Critical Minerals Mission, indicates a broader national commitment to building a secure, competitive critical-minerals ecosystem. The proposed support and help for magnet manufacturing, a segment where India has historically depended on global supply chains, can unlock new opportunities in the mining, processing, alloying and advanced materials. It instantly builds headroom for Indian companies to participate in high-value applications spanning electric mobility, renewables, electronics and defence”. Furthermore, he cited that now, the real test is now disciplined implementation, making sure the access to technology, developing high-quality processing capability, building responsible mining practices and maintaining ESG safeguards. If this initiative is executed well, it will boost India’s long-term energy transition and manufacturing competitiveness.
The programme will run for seven years
The total budget of Rs.6,450 crore will be given as sales-linked incentives over five years, from which Rs.. 750 crore will be offered as capital subsidy for establishing the facilities. The government plans to award capacity to five manufacturers through a global bidding process, along with each being allowed up to 1,200 MTPA. The programme will run for seven years such with a two–year period for establishing up the plants and five years for incentive payouts. Now, the government cited that the move will help build a technologically strong and globally competitive manufacturing base, endorsing the broader vision of Viksit Bharat by 2047. This landmark step is expected to create jobs, attract investment and position India as a key player in the global rare-earth magnet market.
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