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Modi government proposes ₹1,345cr scheme to boost rare-earth magnet manufacturing
The proposal is currently under inter-ministerial consultation

Modi government proposes ₹1,345cr scheme to boost rare-earth magnet manufacturing

Jul 11, 2025
04:06 pm

What's the story

The Indian government has proposed a ₹1,345 crore incentive scheme to promote the manufacturing of rare earth magnets in the country. The proposal was made by Union Minister for Heavy Industries and Steel, H D Kumaraswamy. It is currently under inter-ministerial consultation and aims to provide subsidies to manufacturers who process rare earth oxides into magnets.

Incentive details

Scheme likely to cover private, public sector companies

The proposed scheme is likely to cover both private and public sector companies, incentivizing them to set up domestic capacity across the value chain. Kumaraswamy said that as of now, two manufacturers have been proposed under the scheme, but this could change by the time it is finalized. The move comes after China imposed export restrictions on seven rare earth elements and finished magnets in April.

Importance

Used in EVs, hybrid cars, and some ICE vehicles systems

Rare earth magnets are used in the production of permanent magnet synchronous motors (PMSMs), which are used by electric vehicles (EVs). Even hybrid models rely on them for efficient propulsion. In internal combustion engine (ICE) cars, their use is mostly limited to electric power steering and other motorized systems.

Resource management

India has 3rd-largest rare earth reserves in the world

India has the third-largest rare earth reserves in the world, but only 20% of its geological potential has been explored. Industry experts say that now is the time to expedite exploration and build domestic capabilities. India Rare Earth Limited (IREL) will play a key role by supplying around 500 tons of rare earth raw materials to original equipment manufacturers (OEMs) engaged in magnet production.

Industry hurdles

Regulatory, technological hurdles significant: Hindustan Zinc CEO

Arun Misra, CEO of Hindustan Zinc and Executive Director at Vedanta, said that while India is rich in monazite, a key source of neodymium for rare earth magnets, the regulatory and technological hurdles are significant. He stressed the need for substantial investment in smelting technology and R&D, as the technology to extract neodymium from rare earth chlorides is currently held by Japan and China.