Indian Cabinet Approves INR 7280 Cr Rare Earth Scheme

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the 'Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets' with a financial outlay of INR 7280 crore. 

REPMs are one of the strongest types of permanent magnets and are vital for electric vehicles (EVs), renewable energy, electronics, aerospace, and defence applications. 

REPM Manufacturing Facilities in Sight

The Scheme is expected to fuel the creation of integrated REPM manufacturing facilities, involving conversion of rare earth oxides to metals, metals to alloys, and alloys to finished REPMs.

This first-of-its-kind initiative aims to establish 6,000 Metric Tons per Annum (MTPA) of integrated Rare Earth Permanent Magnet (REPM) manufacturing in India. This is also in line with India’s self-reliance ambition and is expected to help the country become a key player in the global REPM market.

Demand to Shoot 2X by 2030

Driven by the rapidly growing demand from EVs, renewable energy, industrial applications, and consumer electronics, India's consumption of REPMs is expected to double by 2030 from 2025, the official statement noted. 

At present, India's demand for REPMs is met primarily through imports. With this initiative, India will establish its first-ever integrated REPM manufacturing facilities, generating employment, strengthening self-reliance and advancing the nation's commitment to achieve Net Zero by 2070, added the Ministry of Heavy Industries.

The total financial outlay of the scheme is INR 7280 crore, comprising sales-linked incentives of INR 6450 crore on REPM sales for five years and capital subsidy of INR 750 crore for setting up an aggregate of 6,000 MTPA of REPM manufacturing facilities.

7 Years of Duration

The scheme envisions allocating the total capacity to five beneficiaries through a global competitive bidding process. Each beneficiary will be allotted up to 1,200 MTPA of capacity.

The total duration of the scheme will be 7 years from the date of award. This includes a 2-year gestation period for setting up an integrated REPM manufacturing facility, and 5 years for incentive disbursement on the sale of REPM.

This initiative by the Government of India is a landmark step towards strengthening the domestic REPM manufacturing ecosystem and enhancing competitiveness in the global markets. 

It embodies the Government's commitment to building a technologically self-reliant, globally competitive, and sustainable industrial base, in line with the vision of Viksit Bharat @2047, as noted by the Ministry.

Global Context: Major Markets Racing to Establish REPM Manufacturing

India's ambitious REPM scheme aligns with a broader global movement to reduce dependence on China, which currently controls approximately 90 percent of rare earth permanent magnet manufacturing.

United States

In July 2025, the US Department of Defense made a landmark USD 400 million equity investment in MP Materials, coupled with a 10-year floor price guarantee and 100 percent offtake commitment for rare earth magnets.

MP Materials' Independence facility in Fort Worth, Texas commenced commercial production of neodymium-praseodymium (NdPr) metal and trial production of automotive-grade sintered magnets in early 2025, with capacity ramping to approximately 1,000 metric tons annually by late 2025 and scaling to 10,000 metric tons over the next decade.

The US government's total investment in rare earth supply chain strengthening since 2020 exceeds USD 439 million.

Europe

The EU’s 2024 Critical Raw Materials Act (CRMA) sets clear industrial sovereignty benchmarks for 2030 for rare earth elements (REEs). It entails that all EU member states establish emergency stockpiles of REEs - at least 10 percent of EU annual demand from domestic extraction, 40 percent of domestic processing, 25 percent of domestic recycling, and no more than 65 percent dependence on a single third country at any point in the supply chain.

The EU has funded Europe’s largest rare-earth magnet factory in Narva, Estonia. The factory was built with the support of EUR 14.5 million from the Just Transition Fund. Norway's Fen Complex, Europe's largest known rare-earth deposit discovered in June 2024, contains an estimated 1.5 million tonnes of magnet-grade material, providing crucial feedstock security.

United Kingdom

Like other major markets, the United Kingdom is also looking to cut its reliance on critical minerals. The UK government awarded EUR 11 million to Ionic Technologies for its CirculaREEconomy project to build a UK supply chain for recycling rare earth permanent magnets by 2027.