Big Boost for EVs: Cabinet Approves ₹7,280 Cr Scheme for Rare Earth Magnet Manufacturing

In a major strategic move to secure India’s high-tech future, the Union Cabinet today formally approved the ‘Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPM)’.

The initiative, backed by a precise financial outlay of ₹7,280 Crore over a seven-year period, is aimed at establishing India’s first end-to-end integrated ecosystem for these powerful magnets. This decisive action is crucial to eliminate the country’s near-total reliance on imports for materials vital to Electric Vehicles (EVs), wind turbines, and defence systems.

Investment Breakdown and Capacity Targets
The total approved budget of ₹7,280 Crore is structured to drive both initial capital investment and long-term production growth:

Sales-Linked Incentives: ₹6,450 Crore allocated as Production Linked Incentives (PLI) to be disbursed over five years, based on incremental sales of REPMs.

Capital Subsidy: ₹750 Crore provided as a capital subsidy to support the setting up of the manufacturing facilities.

The scheme targets the creation of 6,000 Metric Tons Per Annum (MTPA) of integrated REPM manufacturing capacity. This will be distributed among five selected beneficiaries through a global competitive bidding process, with each unit expected to have a capacity of up to 1,200 MTPA.

Strategic Imperative: Securing the Digital & Green Economy
Rare Earth Permanent Magnets, particularly Neodymium-Iron-Boron (NdFeB) magnets, are essential for high-performance motors. Their global supply chain is concentrated, posing a risk to India’s ambitious targets:

Electric Mobility: REPMs are the heart of powerful EV motors. Domestic production ensures a secure supply for the rapidly expanding EV sector.

Net Zero Goals: The magnets are crucial for wind turbine generators, aligning the scheme directly with India’s Net Zero 2070 commitment.

Defence and Aerospace: Ensuring a steady, non-dependent supply for strategic military equipment and aerospace applications is a major objective.

The initiative requires the selected manufacturers to establish fully integrated facilities, encompassing the entire value chain: from converting rare earth oxides into metals, processing metals into alloys, and finally producing the finished, sintered REPMs.

The scheme’s seven-year duration includes a two-year period for manufacturers to set up the integrated plant, followed by five years of incentive disbursement based on production. This approach is intended to foster long-term self-reliance and global competitiveness.