For years, rare earth permanent magnets quietly powered the modern world while staying completely out of the headlines. They sit hidden inside EV motors, wind turbines, missiles, drones, fighter jets, smartphones and industrial machines – tiny components with massive strategic importance. India, meanwhile, was living with a strange contradiction: one of the world’s top rare earth deposit holders, but almost entirely dependent on imports for high-value magnets.
That contradiction turned into a vulnerability when China, which dominates over 80% of global refining and magnet-making capacity, started squeezing exports and using rare earths as a bargaining chip in geopolitical negotiations earlier this year. Suddenly, a few grams of magnets could slow down billions of dollars worth of EV and clean-tech production.
Against this backdrop comes the Union Cabinet’s approval of a ₹7,280 crore “Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPM)”, chaired by Prime Minister Narendra Modi and projected as a first-of-its-kind, strategic intervention. The scheme’s background lies in three converging realities: one, India’s consumption of REPMs is rising fast, driven by EVs, renewables, industrial automation and defence, and is expected to roughly double by 2030.
Two, India’s current demand of around 4,000–5,000 tonnes a year is met primarily via imports, a large share from China, leaving the country exposed to price spikes and sudden supply disruptions.
Three, India has about 6.9 million tonnes of rare earth placer deposits along its coasts, but historically exported low-value ores and imported high-value magnets because it lacked refining, separation, alloy-making and magnet-production capabilities. The new scheme is designed to close that historic gap and rebuild capabilities India effectively lost since the 1990s.
The core design of the REPM scheme reads like an industrial strategy blueprint. With a financial outlay of ₹7,280 crore, it aims to create 6,000 MTPA of integrated rare earth permanent magnet manufacturing capacity in India. This will be allocated to up to five players through a global competitive bidding process, each getting up to 1,200 MTPA of capacity. The support has two pillars: around ₹750 crore in capital subsidy to help set up the plants, and about ₹6,450 crore as sales-linked incentives spread over five years once production starts.
The total scheme duration is seven years from award: roughly two years as gestation for building the integrated facilities, followed by five years of incentive disbursal. The idea is not to just assemble magnets, but to create a full value chain – convert rare earth oxides into metals, metals into alloys, and alloys into high-performance sintered magnets under one national ecosystem.
The geopolitical trigger cannot be ignored. When China tightened its export regime on rare earth magnets and related technologies, industries around the world went into scramble mode. For Indian automotive manufacturers, the shock was direct: orders delayed, costs uncertain, and long-term planning under stress. Beijing’s message was clear – control the magnets, control the negotiations.
That episode pushed rare earths from the footnotes to the front page of strategic thinking in New Delhi. The REPM scheme is a reply in the same language: if magnets are going to be a bargaining chip, India wants its own stack of chips on the table. By launching this programme alongside the semiconductor mission and the National Critical Minerals Mission, the government is signalling that critical materials, advanced manufacturing and national security are now being treated as one integrated agenda.
So how does all this translate into India’s EV supply chain and cost structure? Think of the EV motor as the beating heart of an electric car or scooter – and rare earth magnets as the core muscle. Today, Indian EV makers mostly import these magnets baked into motors or sourced as components. When global prices rise or shipments are delayed, the cost of the drive unit goes up, margins get squeezed and, eventually, the consumer pays through higher sticker prices or slower launches.
With domestic integrated magnet manufacturing, several cost levers begin to move in India’s favour. First, logistics and import costs shrink as magnets are produced within the country, closer to motor plants and vehicle factories. Second, sales-linked incentives effectively reduce the net cost of domestic magnets, making them more competitive against imported ones and giving EV manufacturers the confidence to sign long-term contracts at more stable prices. Third, a predictable, home-grown supply reduces the “risk premium” that OEMs mentally build into their sourcing strategies when they fear future export controls or geopolitical flare-ups. Over time, all this helps bring down or stabilise the cost of motors and drivetrains – which are among the most expensive parts of an EV – and supports more aggressive pricing of vehicles in the mass market.
Industry voices have already started joining the dots. Auto bodies and component associations see this as a crucial missing puzzle piece in India’s clean mobility story: a way to make EV supply chains not just greener, but also tougher and cheaper in the long run. A home-grown REPM ecosystem will also encourage more localisation of advanced motors, sensors and electronics, pushing India up the value chain from assembly hub to technology hub. Add battery recycling and critical-mineral recovery into the mix, and this magnet mission becomes a launchpad for a wider advanced materials and clean-tech industry. The real test, as experts warn, will be disciplined execution: securing technology partnerships, building world-class refining and alloying capabilities, enforcing strict environmental and ESG standards, and ensuring that India does not replace one dependency with another. But if the execution matches the ambition, this ₹7,280 crore REPM scheme could do something rare in policy—turn an invisible vulnerability into a visible competitive edge, and make the cost of going electric in India not just aspirational, but genuinely affordable
