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With an eye on reducing dependence on imports, the Union Cabinet has approved the ‘Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets’ with an allocation of INR 7,280 Cr (about $815 Mn).
The scheme aims to develop domestic rare earth permanent magnets (REPMs) manufacturing capability with a capacity of 6,000 metric tonnes per annum (MTPA), the Centre said in a statement.
Hailing the approval of the scheme, Prime Minister Narendra Modi, in a post on X, called it a “historic first for India’s high-tech manufacturing”.
The scheme will be valid for a period of seven years from the date of award, which also includes a two-year gestation period to set up integrated REPM facility and the remaining five years for incentive disbursement on the sale of REPM.
Of the overall allocation, sales-linked incentives comprise INR 6,450 Cr for five years and a capital subsidy of INR 750 Cr to establish an aggregate of 6,000 MTPA of REPM production units.
Notably, REPMs are among the strongest types of permanent magnets and find usage in EVs, renewable energy, industrial applications, and consumer electronics. While the demand for REPMs has been on the rise, India was dependent on imports for them till now. India’s consumption of REPMs is expected to double by 2030 from 2025.
The new scheme will strengthen self-reliance in the area while generating employment opportunities, the government said.
Notably, China, which is an exporter of rare earth magnets, banned the export of seven critical rare earth elements — samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium – in April this year. This caused supply chain disruptions and hit industries, especially EV manufacturers.
While Bajaj Auto’s production was hit for a few weeks, Ather Energy said in September that it had to temporarily deviate from the manufacturing guidelines prescribed under the PM E-DRIVE scheme and the Phased Manufacturing Program (PMP) due to the ban on exports of certain categories of heavy rare earth magnets by China.
The new scheme is aimed to prevent a recurrence of such events. Besides, it is also part of the Centre’s broader push to make India self-reliant and a manufacturing hub by incentivising domestic production.
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