Centre Clears Rs 7,280-Crore Scheme For EV, Defence Supply Chain; Cut China Dependence
The initiative, offering sales-linked incentives and capital support, aims to establish a domestic production chain, reduce import dependence, especially from China, and boost employment.
Amid China’s export restrictions on rare earth materials, the Indian government has taken a major step by approving a Rs 7,280-crore scheme for manufacturing rare earth permanent magnets. The programme will launch domestic production of these magnets for the first time, with a planned capacity of 6,000 Metric Tonnes Per Annum (MTPA).
The Union Cabinet, chaired by Prime Minister Narendra Modi, cleared the “Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets” during its meeting. Announcing the decision, Information and Broadcasting Minister Ashwini Vaishnaw said the target is to build India’s capability to produce 6,000 tonnes of rare earth permanent magnets every year.
Rare earth permanent magnets are among the most powerful magnets in the world. They are vital components in electric vehicles, renewable energy equipment, consumer electronics, aerospace technologies and defence systems. India’s demand for these magnets has been rising sharply and is expected to double by 2030 compared to 2025 levels. Currently, most of the requirement is met through imports.
This initiative will help India establish its first complete Rare Earth Permanent Magnet (REPM) production chain, converting rare earth oxides into metals, turning metals into alloys and then manufacturing finished magnets. The government says the scheme will generate employment, boost domestic industry and significantly reduce foreign dependence while supporting India’s Net Zero 2070 commitments.
Financial Structure of the Scheme
Out of the total ₹7,280-crore outlay, ₹6,450 crore will be provided as sales-linked incentives for five years, and ₹750 crore will be offered as capital support for setting up manufacturing plants. The total production capacity will be divided among five companies, with each being allocated up to 1,200 MTPA. The scheme will run for seven years — the first two years spent establishing production facilities, followed by five years of incentive disbursement.
Aiming for Technological Self-Reliance
The government said the initiative will allow India to build a globally competitive ecosystem in REPM production and secure the supply chain for local industries. Officials also emphasised that the move marks a crucial milestone toward the vision of a developed India by 2047 and accelerates progress towards Net Zero goals.
India currently relies largely on imports, particularly from China, for rare earth permanent magnets. Through investments in processing, refining and magnet manufacturing, the scheme aims to close critical capability gaps and prepare the country for future growth in high-technology sectors.
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