India has taken a major step in its industrial policy with the approval of the ₹7,280 crore ‘Scheme to Promote Manufacturing of Rare Earth Permanent Magnets’, marking a strategic move to strengthen its technological and economic foundations. Rare Earth Permanent Magnets (REPMs), often described as the “vitamins” of modern industry, are critical to the functioning of advanced technologies — yet India currently depends on imports for nearly all of its supply.
India holds an estimated 6.9 million metric tonnes of rare earth reserves, ranking among the world’s top holders of these critical minerals, but contributes just a small fraction of global output. Despite this resource base, complex mining and processing challenges, including the need to refine rare earth oxides and manage environmental concerns, have limited India’s production to about 0.7 % of the world’s total.
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The seven-year programme seeks to create an integrated production capacity of 6,000 metric tonnes per annum (MTPA) of high-performance sintered Neodymium-Iron-Boron magnets. Unlike earlier initiatives that focused mostly on raw material extraction, this scheme covers the entire value chain — from converting rare earth oxides to metals and alloys to magnets. The financial architecture includes ₹6,450 crore in sales-linked incentives and ₹750 crore in capital subsidies, which will be allocated to five companies through a global competitive bidding process.
An immediate goal of the scheme is to reduce India’s near-total import dependence, especially on China, which currently dominates the global rare earth magnet supply chain. In the fiscal year ending March 2025, India imported over 53,000 tonnes of rare earth magnets, with domestic demand projected to nearly double by 2030 if current growth trends continue.
India’s EV Ambitions
The policy is expected to play a crucial role in supporting India’s electric vehicle (EV) ambitions. Permanent magnets are used in around 92 % of EV traction motors worldwide due to their superior efficiency, which can be 15 %–20 % higher than conventional alternatives. Since magnets can account for up to half of an EV motor’s total cost, local manufacturing is expected to stabilise prices and reduce exposure to global supply fluctuations, making EVs more affordable for Indian consumers.
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Beyond cost advantages, domestically produced high-grade magnets can also reduce the weight of EV motors by 20 %–30 %, which contributes to better vehicle performance, improved energy efficiency, and longer driving ranges. These benefits are critical for India’s goal to achieve a 30 % EV penetration by 2030.
Electronics: The Backbone for Digital India
The electronics sector is another major beneficiary of the initiative. Rare earth magnets are vital for consumer devices such as smartphones, laptops, and high-fidelity speakers, where they enable miniaturisation and precision. With India meeting nearly all of its domestic smartphone demand through local manufacturing, securing a reliable magnet supply is essential for the robustness of the electronics ecosystem.
Industrial automation and robotics also depend on high-torque servo motors powered by these magnets, which are essential for precision manufacturing and advanced technology assembly. India has become one of the fastest-growing markets for industrial robots worldwide, and continued growth in this sector depends on access to high-quality magnetic components.
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Aatmanirbhar Bharat & NetZero@2070
Strategically, the scheme reflects the government’s Atmanirbhar Bharat vision and aims to safeguard sectors such as defence, aerospace, and telecommunications from external supply disruptions. It also aligns with India’s Net Zero 2070 goals, as magnet-based technologies improve energy efficiency across EVs, wind turbines, and industrial systems, helping reduce lifecycle emissions.
However, analysts note that India’s ability to fully benefit from its large rare earth reserve base depends on overcoming several hurdles. The country currently lacks advanced separation and processing technologies for rare earth elements, especially for heavy rare earths, necessitating foreign technical expertise and significant investment in infrastructure. Environmental challenges related to radioactive waste from extraction and strict regulatory requirements could also slow progress.
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Looking ahead, the government is also exploring “urban mining” — recovering rare earths from electronic waste — as a circular economy approach that could further enhance domestic supply and reduce import dependence. As India moves to turn its substantial rare earth mineral reserves into industrial strength, the world will watch if this comprehensive policy can help the country transition from a net importer to a resilient global player in the critical materials supply chain.
As India builds control over one of the most critical materials of the green and digital economy, could this push mark the beginning of its emergence as a global hub for advanced manufacturing?
