India has approved a new incentive programme worth 72.8 billion rupees ($880 million) to promote domestic manufacturing of sintered rare earth permanent magnets (REPMs), as the country seeks to reduce its heavy dependence on imports and shield key industries from supply disruptions.
Under the scheme, the government will allocate 7.5 billion rupees as capital subsidies to support the establishment of REPM manufacturing plants, while 64.5 billion rupees will be distributed as sales-linked incentives over a five-year period. The government has not yet detailed how the remaining 800 million rupees will be used.
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The programme is designed to enable India’s first fully integrated REPM manufacturing facilities, covering the value chain from rare earth oxides and alloys to finished magnets. Authorities have set a target of localising annual production capacity of 6,000 tonnes, with five companies to be selected through a bidding process and each allocated up to 1,200 tonnes of capacity.
Companies approved under the scheme will have seven years to participate, including two years to build manufacturing facilities and five years to earn incentives based on sales performance. The government said rare earth permanent magnets are expected to remain critical for sectors such as electric vehicles, renewable energy, electronics, aerospace and defence, with demand projected to double by 2030 compared with 2025 levels.
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India’s reliance on imports has grown sharply in recent years. In the 2025 financial year, the country imported 53,748 tonnes of rare earth magnets, nearly double the volume recorded a year earlier. Most of these imports come from China, leaving Indian manufacturers exposed to supply risks.
Earlier this year, Chinese export restrictions on certain rare earth elements and related products disrupted supplies to India, forcing some electric vehicle makers to cut output. Although China began issuing conditional export licences to a small number of Indian firms in October, the government said broader risks remain, underscoring the urgency of developing domestic REPM manufacturing capacity.