A magnet small enough to fit inside a motor could decide whether India’s electric-vehicle, wind-energy and defence ambitions run smoothly or stay exposed to supply shocks. India is preparing to spend ₹7,280 crore on domestic rare-earth permanent magnet production, but the biggest risk is no longer only the absence of factories. It is whether the plants selected can make high-performance magnets that customers will certify.
That capability question has moved to the centre of the integrated Rare Earth Permanent Magnet scheme as bidding enters its final stretch. The Ministry of Heavy Industries has set July 29 as the revised deadline for selecting manufacturers to establish 6,000 tonnes per annum of sintered neodymium-iron-boron magnet capacity, with technical bids opening a day later.
The stakes extend far beyond one component. Rare-earth permanent magnets are used in electric-car motors, wind turbines, industrial robots, advanced electronics, aerospace systems and defence equipment. India’s demand is expected to double by 2030 from 2025 levels, while current requirements are met primarily through imports.
Trade data based on DGCI&S figures underline the vulnerability. India imported about $319.7 million of permanent magnets in 2025, with China supplying $226.7 million, or nearly 71%. In metallic permanent magnets, China’s share was 79%. Across permanent magnets, electromagnets and related parts, India’s imports stood at $422.75 million, of which Chinese supplies accounted for $253.84 million.
A shortage can stall a production line. An electric vehicle may contain thousands of parts, but a manufacturer cannot complete it if the motor magnet is unavailable or fails qualification. The same applies to turbines and defence platforms, where performance must withstand heat, vibration and prolonged use.
The scheme seeks to close this gap by supporting a domestic chain from neodymium-praseodymium oxide to metals, alloys and finished magnets. It offers ₹6,450 crore as sales-linked incentives and ₹750 crore as capital subsidy. Up to five beneficiaries are envisaged, with individual allocations of 600-1,200 tonnes annually. At least 25 companies joined the pre-bid conference.
However, constructing capacity is not the same as mastering production. Integrated manufacturing involves oxide conversion, alloy preparation, strip casting, hydrogen decrepitation, jet milling, powder handling, pressing, sintering, machining, coating, magnetisation and testing. A change in purity, powder behaviour or furnace conditions can affect magnetic strength, heat resistance and reliability.
Experience must therefore carry weight in selection. A company may import sophisticated machinery and complete a factory on schedule, but still struggle to maintain yields or identical quality across batches. Automotive, electronics and defence customers qualify tested products, not nameplate capacity. The wrong choice could leave India with subsidised plants dependent on foreign technicians for recipes, process correction and new magnet grades.
“The true technology lies in the manufacturing process itself,” LOHUM said, pointing to alloy recipes, furnace profiles, impurity control, process tolerances and quality systems refined through commercial experience. Machinery purchases or licensing agreements alone, it said, cannot guarantee customer-grade output.
The risk resembles the battery industry, where assembling packs around imported cells does not create mastery over cell chemistry. Similarly, a magnet plant reliant on overseas troubleshooting may reduce finished-product imports without building domestic technology. Failure may surface only after commissioning, when yields remain low or customers refuse certification.
The tender permits bidders to demonstrate readiness through an executed technology-transfer agreement, evidence of technology access or a roadmap for obtaining it. These routes reflect different levels of preparedness. A roadmap shows intent, while even a signed agreement does not prove that domestic teams can absorb and independently improve the technology.
Pilot production should therefore be a critical test. LOHUM said it established a pilot-scale REPM line as a technology-validation platform before its proposed commercial oxide-to-magnet facility. “Commercial factories should represent the culmination of technology development, not the beginning of it,” it said.
The final evaluation must examine pilot output, experienced technical teams, process-control systems, raw-material plans, customer-qualification pathways and the ability to improve yields, alongside financial bids. A low subsidy quote protects public money only when applicants have comparable technical readiness.
India needs magnet factories urgently. But success will not be measured by investment announcements or inaugurated capacity. It will be measured by whether those plants can repeatedly supply magnets that keep vehicles moving, turbines turning and strategic systems operating without an imported lifeline.