Union Cabinet Approves Rs 7280cr Scheme to manufacture Rare Earth Magnets

The Union Cabinet on Wednesday rolled out ‘Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPM)” with a budget of Rs 7280 crore. To achieve self-sufficiency, under this scheme, India is aiming to establish domestic manufacturing capable of producing 6,000 Metric Tons per Annum (MTPA) of integrated REPM.

What is REPM?

Made from rare earth elements like neodymium and samarium, Rare Earth Permanent Magnets (REPMs) are high-performance magnets that are renowned for producing remarkably powerful magnetic force in small diameters. Being one of the strongest types of permanent magnets, REPMs are essential components of electric vehicles, renewable energy, electronics, aerospace, and defence applications. The program will facilitate the development of integrated REPM production facilities, which will convert rare earth oxides to metals, metals to alloys, and then alloys to final REPMs.

About the Scheme

The scheme's overall cost is Rs. 7280 crore, which includes a capital subsidy of Rs. 750 crore for the establishment of 6,000 MTPA of REPM manufacturing facilities and sales-linked incentives of Rs. 6450 crore on REPM sales for five (5) years.

The plan calls for a worldwide competitive bidding process that will allocate the entire capacity to five beneficiaries. Each beneficiary will be granted a maximum capacity of 1,200 MTPA. The scheme is scheduled for 7years, starting from the date of allocation, with a 2-year gestation period to establish an integrated REPM manufacturing facility, and five years for incentive payment on the sale of REPM.

Boost to Self-Reliance

India's REPM demand is expected to double by 2030 from 2025 due to the country's fast-increasing demand for electric vehicles, renewable energy, consumer electronics, and industrial uses. Currently, imports account for the majority of India's REPM demand. With this project, India will build its first integrated REPM manufacturing facilities, creating jobs, boosting independence, and advancing the country's goal of reaching Net Zero by 2070.

The Government of India's move is a significant step toward boosting competitiveness in international markets and fortifying the local REPM manufacturing ecosystem. In addition to securing the REPM supply chain for domestic businesses, the program will assist the country's Net Zero 2070 target by promoting indigenous capabilities in REPM manufacturing. In addition, the update lies with the government of India’s vision of Viksit Bharat @2047.