In a strategic push to reduce dependence on China and strengthen its domestic supply chain for critical minerals, India is planning to allocate ₹1,000 crore to incentivize the domestic production of rare earth magnets, according to government sources.
This initiative is expected to be launched under the Production Linked Incentive (PLI) scheme, aiming to boost the local manufacturing ecosystem for rare earth permanent magnets, which are crucial for clean energy, defense, electronics, and automotive sectors—especially electric vehicles (EVs).
🏭 What Are Rare Earth Magnets and Why They Matter
Rare earth magnets—particularly neodymium-iron-boron (NdFeB) types—are essential components in a wide range of high-tech applications, including:
Electric motors in EVs
Wind turbines
Defense equipment
Smartphones and electronics
Currently, China controls over 90% of global rare earth magnet production. India aims to break this monopoly by creating a self-reliant supply chain.
💰 India’s ₹1,000 Crore Incentive Plan: Key Points
Budget: ₹1,000 crore earmarked for PLI-style incentives
Target Sectors: EVs, aerospace, defense, electronics, and renewables
Implementation Agency: Ministry of Mines and Department for Promotion of Industry and Internal Trade (DPIIT)
Production Focus: NdFeB magnets, samarium-cobalt magnets
Eligibility: Indian companies with tech capability or global partnerships
The scheme will likely include capital subsidies, R&D support, and assured offtake agreements, especially from public sector defense and energy firms.
🌏 Geopolitical Context: Diversifying Away from China
India’s move comes amid increasing geopolitical pressure to diversify global supply chains, especially for critical minerals that are essential for strategic sectors.
“This is a long-overdue step. The world can’t afford a Chinese chokehold on critical magnet supply,” a senior analyst told Reuters.
The government has also signed MoUs with Australia and Japan for raw rare earth supply, to be processed domestically.
📊 India’s Rare Earth Magnet Plan in Numbers
| Parameter | Value |
|---|---|
| Incentive Amount | ₹1,000 crore |
| Target Start Year | FY 2025-26 |
| Expected Capacity (Phase 1) | 5,000–10,000 tonnes/year |
| Key Users | EVs, Defense, Wind Energy |
| Global Market Size (2030) | $15–20 billion |
❓ FAQ Section
Q1: What are rare earth magnets and why are they important?
A: Rare earth magnets, such as NdFeB, are powerful permanent magnets used in electric vehicles, wind turbines, electronics, and defense applications.
Q2: Why is India launching this incentive scheme now?
A: To reduce dependency on Chinese imports, support domestic manufacturing, and build resilience in the supply chain of strategic technologies.
Q3: Who will benefit from the ₹1,000 crore allocation?
A: Indian manufacturers, especially those with tech partnerships or capacity to produce high-grade magnets, will benefit from PLI-style support.
Q4: When will this scheme launch?
A: The scheme is expected to launch in FY 2025–26, pending Cabinet approval and inter-ministerial coordination.
Q5: How does this move align with India’s broader industrial policy?
A: It supports the Make in India and Atmanirbhar Bharat initiatives by focusing on critical minerals and strategic technology self-sufficiency.
Follow us on social media: Facebook || Linkedin || Instagram
Reported by Benny on June 24, 2025.
🛡 Powered by Vizzve Financial
RBI-Registered Loan Partner | 10 Lakh+ Customers | ₹600 Cr+ Disbursed