India Plans ₹1,345 Crore Incentive Scheme to Boost Rare Earth Magnet Manufacturing

To strengthen domestic capabilities in the production of critical components used in electronics, automotive, and defence, the Ministry of Heavy Industries is preparing a ₹1,345 crore incentive scheme to support the manufacturing of rare earth magnets, as per a PTI report. Union Minister HD Kumaraswamy confirmed this development, stating that the proposal is currently under inter-ministerial consultation.

Focus on End-to-End Processing and Incentives for Magnet Makers

The proposed scheme is expected to support both public and private sector enterprises. As of now, two manufacturers are being considered under the scheme, although this number may be revised later. As per the Moneycontrol report, Kamran Rizvi, secretary at the Ministry of Heavy Industry, highlighted that eligible companies must undertake complete processing from rare earth oxides to finished magnets. “We are interested in magnets. Anybody who gives us magnets will get an incentive,” Rizvi stated.

Global Context and India's Strategic Push

The scheme comes in the backdrop of China's ongoing restrictions on rare earth exports, which have impacted global supply chains, especially in the auto and tech sectors. While shipments to the US and Europe have resumed, Indian firms are still awaiting clearance, sparking concerns among automakers and parts manufacturers. 

India holds the world’s 5th-largest reserves of rare earth minerals, but the sector faces regulatory and operational barriers. Presently, rare earth mining is carried out by state-run Indian Rare Earths Limited (IREL), which produced around 2,900 tonnes in 2024. Most of this is directed toward domestic nuclear and defence use, with limited exports to Japan. In response to the global supply situation, IREL plans to halt exports and scale up local production.

Read More: India to Begin Rare-Earth Magnet Production, Reducing China's Dependence!

Conclusion

With Indian companies like Mahindra, Uno Minda, and Sona Comstar showing interest in rare earth magnet production, the government’s scheme could significantly strengthen India’s self-reliance in this strategic segment. The initiative also aligns with the broader national agenda of reducing dependence on imports for critical technologies.

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