Government unveils ₹7,350 crore plan to end China dependency for critical rare earth magnets

The central government is in the final stages of launching a ₹7,350 crore scheme to spur domestic production of sintered rare earth permanent magnets and cut import dependence, following China's imposition of restrictions on exports of these critical components in April.

The initiative, likely to be called the Scheme to Promote Sintered Rare Earth Permanent Magnet Manufacturing in India, aims to establish a fully indigenous manufacturing ecosystem with an annual production capacity of up to 6,000 tonnes over seven years.

While some restrictions were temporarily lifted in August and September 2025 following talks between External Affairs Minister S Jaishankar and Chinese Foreign Minister Wang Yi, the supply disruptions have exposed India's vulnerability.

Under the scheme, the government will back the creation of five integrated manufacturing units, each with a capacity of up to 1,200 tonnes per annum, with applicants able to bid for a minimum of 600 tonnes per annum in 100-tonne increments.

Selected firms will be eligible for two forms of financial support: a sales-linked incentive on the sale of sintered NdFeB magnets and a capital subsidy for establishing integrated manufacturing units. Applicants must specify the per-kilogram sales incentive they seek, capped at ₹2,150 per kg of sintered NdFeB magnet, assuming an average sale price of ₹5,000 per kg.

Indian Rare Earths Ltd currently produces around 500 tonnes of NdPr oxide annually, sufficient for roughly 1,500 tonnes of sintered magnets, meaning participants will need to secure most of their NdPr oxide independently to meet the balance 4,500 tonnes per annum production target.

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