The ministry of finance has approved Rs 7,300 crore for a scheme to promote domestic manufacturing of rare earth magnets. The Cabinet approval for the scheme is expected in the coming months, officials said.
The scheme, to run for seven years, was initially envisaged by the ministry of heavy industries with an outlay of Rs 1,350 crore. It was later increased to Rs 5,000 crore and has now been revised to Rs 7,300 crore to strengthen the domestic base in this critical manufacturing segment.
Officials said the expansion in allocation aims to help build a self-sustaining ecosystem for producing rare earth permanent magnets used in electric vehicles, wind turbines, electronics, and defence systems. The higher support is also expected to widen industry participation and reduce dependence on imports.
The production target under the scheme has been raised from 1,500 metric tonnes to about 6,000 metric tonnes a year, which is projected to meet the country’s estimated demand by 2030.
Of the total outlay, Rs 6,500 crore will be set aside for capital expenditure and Rs 800 crore for operational costs. The scheme will support both public and private sector manufacturers with capabilities across the value chain, from raw material processing to finished magnet production.
Under the revised plan, at least five companies will be eligible for incentives, each for up to 1,200 metric tonnes of annual production. Earlier, the plan was limited to two producers. The change follows feedback from the industry and suggestions from the Prime Minister’s Office to broaden participation.
Industry estimates put current domestic demand for rare earth magnets at around 4,000 metric tonnes per year, which could double by the end of the decade. The revised output target is expected to cover this requirement.
Several industrial groups including JSW, Mahindra, Kalyani, Sona Comstar, Midwest Advanced Materials, Entellus and Proterial participated in consultations on the scheme’s design.
India holds an estimated 6.9 million metric tonnes of rare earth reserves but produced only about 2,900 tonnes in 2024. Imports of rare earth magnets touched 53,000 tonnes in FY25, reflecting the gap between domestic supply and demand. IREL remains the only public sector company involved in rare earth mining and refining.
Officials said the increased outlay and broader scope are aimed at ensuring steady domestic capacity in a segment that has become vital for clean energy and industrial manufacturing goals.