Rama Krishna Sangem
In a major push to develop critical technology supply chains, the Centre has earmarked Rs 1,345 crore to establish domestic production of rare earth magnets, Heavy Industries Minister HD Kumaraswamy announced on July 11 Friday. Kamran Rizvi, Secretary at the Ministry of Heavy Industries, added that the draft scheme for rare earth magnet processing has already been circulated for inter-ministerial consultations, setting the stage for a comprehensive policy rollout.
According to PTI sources, the proposal will be forwarded to the Union Cabinet for final approval after these consultations are concluded. Rizvi further revealed that the Rs 1,345-crore scheme is currently under inter-ministerial review, aiming to provide “end-to-end” support to two manufacturers to convert rare earth oxides into finished magnets.
The move comes after China, the world’s dominant supplier, imposed export restrictions in April this year on seven rare earth elements and finished magnets. Under the revised rules, Chinese exporters must secure licences and submit end-use declarations confirming materials won’t be used in defence or re-exported to the US.
PTI had reported earlier citing sources familiar with the discussions that the Ministries of Heavy Industries and Mines were in the process of finalising guidelines to incentivise local manufacturing of rare earth magnets and minerals—key inputs for sectors including telecom, electric vehicles, and defence.
M&M, Uno Minda, others dive in
The proposed scheme is expected to cover both private companies and public sector enterprises, offering incentives to set up domestic capacity across the value chain—from mining and refining critical minerals to fabricating finished magnets, according to the report.
“We are interested in magnets. Anybody who gives us magnets will get incentive. This (Rs 1,345 crore scheme) is the first outline we have sent for inter-ministerial consultation. It is proposed that there will be two manufacturers,” Rizvi said on Friday.
Reuters reported citing sources on Thursday that automaker Mahindra & Mahindra and parts maker Uno Minda have already expressed strong interest in setting up domestic magnet production. During a meeting with the Ministry of Heavy Industries in June, Mahindra indicated it could either partner with an established producer or enter a long-term supply agreement with a local manufacturer.
With the company launching new electric SUVs, captive demand for magnets is growing. Uno Minda, which supplies major automakers such as Maruti Suzuki, also signalled plans to explore local manufacturing.
Their proposals follow earlier interest from Sona Comstar, which supplies gears and motors to global companies including Ford and Stellantis, and was the first Indian company to formally express intent to produce magnets domestically.
However, officials told Reuters that final decisions on investment timelines would hinge on the incentives under the scheme and the ease of securing raw materials.
India taps into potential
India, which imported more than 80% of its 540 tonnes of magnets from China last fiscal, has already begun to feel the impact of tightened controls. With Beijing controlling over 90% of global magnet processing capacity, officials told PTI that the scheme is crucial to secure supply chains for critical applications such as electric motors, braking systems, smartphones, and missile guidance technologies.
While China sits atop the world’s largest reserves of rare earth elements—estimated at 44 million tonnes—India ranks third globally with deposits totalling 6.9 million tonnes, according to the US Geological Survey. If India can successfully taps its own reserves, it can easily meet the near term needs of the domestic industry, without depending on China. Of course, China must be watching our efforts to become self-reliant on this rare earths front also.
