NEW DELHI: Amid growing concern over rare earth magnet supply disruption, inter-ministerial consultations are underway for implementing a Rs 1,345 crore incentive scheme for production of these magnets locally.
“The government is interested in manufacturers who process rare earth oxides to magnets. Eligible manufacturers will be selected, and once the selection is over, they can start production immediately,” said an official from the Ministry of Heavy Industries.
Last month, minister of heavy industries HD Kumaraswamy had said that if the total incentive crosses Rs 1,000 crore, the scheme will be sent to the Union cabinet for approval. The scheme will incentivise domestic manufacturing of rare earth magnet, a key component in electric vehicles (EVs) and electronics manufacturing.
India sourced over 80% of its approximately 540 tonnes of magnet imports from China last financial year. China is the world's dominant exporter of rare earth magnets, controlling over 70% of global Rare Earth Element (REE) production and over 90% of refining capacity.
In April 2025, Beijing imposed stricter export controls on seven rare earth elements and finished magnets, mandating export licenses. This revised framework demands detailed end-use disclosures and client declarations, including confirmation that products will not be used in defense or re-exported to the US.
Rare earth magnets are made from alloys of rare earth elements. They are integral to Permanent Magnet Synchronous Motors (PMSMs), which are widely used in EVs for their high torque, energy efficiency, and compact size. Hybrid vehicles also rely on them for efficient propulsion. In Internal Combustion Engine (ICE) vehicles, their use is primarily limited to electric power steering and other motorized systems. Elements like Dysprosium (Dy), Terbium (Tb), Neodymium (Nd), and Praseodymium (Pr) are crucial for these magnets, especially in high-performance applications.