Govt to launch ₹1,345 crore scheme for rare earth magnet production

The Ministry of Heavy Industries is preparing to roll out a subsidy scheme worth ₹1,345 crore aimed at promoting domestic manufacturing of rare earth magnets, Union Minister HD Kumaraswamy said on Friday, reported news agency PTI. The proposal is currently under inter-ministerial consultation.

 

"It is proposed that there will be two manufacturers as of now, however, this could change by the time the scheme is ready," Kumaraswamy said, as quoted by Moneycontrol.

 

The scheme is expected to support both public and private sector companies, the report added.

 

Meanwhile, the secretary of the Ministry of Heavy Industry said that eligible manufacturers must carry out end-to-end processing—from rare earth oxides to finished magnets.

   

Kamran Rizvi, secretary at the Ministry of Heavy Industry, said that eligible manufacturers must carry out end-to-end processing—from rare earth oxides to finished magnets, reported Moneycontrol.

 

"We are interested in magnets. Anybody who gives us magnets will get incentive," Rizvi added.

 

India's tryst with rare earth

 

The development comes amid China’s restrictions on rare earth exports, which have led to supply challenges for automakers and tech firms worldwide. While shipments to the United States and Europe have resumed, Indian companies are still awaiting clearances, prompting concerns among domestic automakers and component manufacturers.

 

India has the fifth-largest reserves of rare earth minerals globally. However, extracting and processing these minerals remains complex due to regulatory and operational hurdles.

 

Currently, rare earth mining is managed by state-run Indian Rare Earths Limited (IREL). In 2024, the company produced approximately 2,900 tonnes of rare earth ore. Most of this output supports domestic nuclear and defence needs, with only a small portion exported to Japan. Following the Chinese supply disruption, IREL is preparing to stop exports and ramp up its own mining and processing operations.

 

Meanwhile, many Indian companies like Mahindra, Uno Minda, and Sona Comstar have announced that they are exploring the domestic production of rare earth magnets.