The Prime Minister’s Office (PMO) has asked the ministry of heavy industry (MHI) to hold further consultations with industry stakeholders before rolling out a Rs 1,350 crore incentive scheme aimed at promoting domestic manufacturing of heavy rare earth magnets.
Official sources said that though the PMO has given its in-principle nod to the scheme, it has asked the MHI to gather more detailed feedback on its structure, the scale of incentives, and its overall viability. The move reflects the Centre’s cautious approach toward a strategically important sector where the country remains heavily import-dependent.
Need for Deeper Industry Engagement
Sources said that in a high-level meeting on Friday, the PMO emphasised the need to address industry concerns thoroughly before finalising the policy. According to officials, the MHI will conduct more stakeholder discussions in the coming weeks and is likely to invite written submissions from companies within the next few days.
Rare earth-based permanent magnets play a critical role in a range of applications including electric vehicles, consumer electronics, wind turbines, and defence equipment. India currently imports a significant share of these magnets from China, exposing domestic manufacturers to supply chain risks amid geopolitical uncertainties and export restrictions.
Scope of the Incentive Scheme and Industry Interest
The proposed incentive scheme, which is under inter-ministerial review, is expected to initially support two manufacturers. It will be open to both public and private sector participants willing to undertake end-to-end magnet production from rare earth oxides. The scheme is projected to run for seven years and is designed to build a domestic supply chain for this high-tech segment.
Despite holding an estimated 6.9 million metric tonnes of rare earth reserves, India mined only 2,900 tonnes in 2024. In contrast, imports of rare earth magnets reached 53,000 metric tonnes in FY25. At present, IREL remains the sole state-run entity involved in rare earth mining and refining.
Interest in local magnet production is growing. At least five to six companies have shown intent, including key importer Sona Comstar and Hyderabad-based Midwest Advanced Materials. The latter has committed to producing 500 tonnes of magnets by the end of 2025 and scaling up to 5,000 tonnes by 2026.