Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets

About the Scheme

  • Approved by the Union Cabinet in November 2025; outlay of ₹7,280 crore.
  • A first-of-its-kind national initiative to build a complete domestic supply chain — from refining rare-earth oxides to producing metals, alloys and finished sintered magnets.
  • Target Capacity: 6,000 Metric Tonnes Per Annum (MTPA), allocated among five beneficiaries (1,200 MTPA each) selected through global competitive bidding.
  • Financial Structure:
  • ₹750 crore capital subsidy for setting up units
  • ₹6,450 crore sales-linked incentives
  • Duration: 7 years — 2-year gestation period (facility setup) + 5 years of incentive disbursement.

Need for the Scheme

  • Surging Demand: India's REPM demand is projected to double by 2030; imports exceeded 53,000 metric tonnes in 2024–25.
  • Supply Chain Vulnerability: Between 2022 and 2025, China supplied 60–90% of India's permanent magnets; China's tightening export rules caused delays, cost escalation and production risks for Indian EV makers and automakers.
  • Strategic Alignment: Supports clean mobility, energy security, Net Zero 2070 and Viksit Bharat 2047 goals.

What are Rare Earth Permanent Magnets (REPMs)?

  • High-performance magnets made from rare earth elements such as Samarium (Sm), Neodymium (Nd), Praseodymium (Pr), Dysprosium (Dy) and Cerium (Ce).
  • Superior Properties: Higher maximum energy product, greater coercivity and stronger magnetic output in compact sizes compared to ferrite or AlNiCo magnets.
  • Sintered REPMs: Produced by compacting fine rare-earth alloy powders under intense pressure and heating at high temperatures. Sintered NdFeB (neodymium-iron-boron) and SmCo (samarium-cobalt) magnets are the strongest commercially available permanent magnets.
  • EV Importance: NdFeB magnets are vital for EV traction motors, steering, braking — improving mechanical efficiency, power output and battery range.

India's Policy Measures for Rare Earths

  • MMDR Amendment Act, 2023: De-listed several critical minerals, including rare earths, from the atomic minerals list, enabling commercial mining and private participation.
  • National Critical Mineral Mission (NCMM): Approved in January 2025; focuses on exploration, processing, recycling and overseas asset acquisition.
  • Dedicated Rare Earth Corridors: Announced in Union Budget 2026–27 for Odisha, Kerala, Andhra Pradesh and Tamil Nadu.
  • International Partnerships: With Australia, Argentina, Zambia and Mozambique; KABIL (Khanij Bidesh India Limited) has partnered with Argentina for lithium exploration.

Key Challenges

  • Visibility Gap: Domestic magnet market estimated at ₹750 crore, but imports are far higher as magnets enter embedded in EV motors and wind turbines. Imports nearly doubled from 28,700 tonnes (FY2023–24) to 53,700 tonnes (FY2024–25).
  • Shallow Exploration & Failed Auctions: Only about 48% of critical-mineral blocks auctioned during 2020–23 were successfully sold, due to inadequate G1/G2 exploration data.
  • Heavy Rare Earth Deficit: India holds 13.15 million tonnes of monazite containing ~7.23 million tonnes of Rare Earth Oxides (REOs) across eight states (Odisha, Kerala, Andhra Pradesh, Tamil Nadu, West Bengal, Gujarat, Maharashtra, Jharkhand). However, deposits are skewed toward Light Rare Earth Elements (LREEs) like Cerium, Lanthanum and Neodymium, and lack Heavy Rare Earth Elements (HREEs) like Dysprosium and Terbium, essential for high-temperature performance of NdFeB magnets.
  • Monazite-Thorium Regulatory Knot: Monazite occurs with radioactive Thorium, reserved for the nuclear program, subjecting extraction to restrictive atomic energy regulations.
  • Absence of Circular Economy: No specific material recovery targets for rare earth magnets; treated as general e-waste.

Way Forward

  • Map the Value Chain: Update NCMM's monitoring framework to record capabilities at every stage (ore to final assembly).
  • Mineral Diplomacy: Secure heavy rare earth offtake through overseas acquisitions, conditional on processing within India.
  • De-Risk Monazite Processing: Create a licensed, transparent private participation route for the non-thorium fraction, with strict custody protocols for thorium residue.
  • Urban Mining & Circular Economy: Establish e-waste protocols to recover NdFeB magnets from end-of-life EVs and electronics, creating secondary domestic feedstock.

Significance

  • Reduces strategic dependence on a single dominant supplier (China).
  • Strengthens India's EV manufacturing, wind energy and defence-adjacent industries.
  • Advances critical mineral security as a pillar of economic security and technological sovereignty.