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On November 26, 2025, the Indian government officially approved the Program for Promotion of Sintered Rare Earth Permanent Magnet (REPM) Manufacturing. This is the first time that the country has introduced a national-level special program covering the entire chain of local REPM production, with the core aim of reducing dependence on overseas supply chains such as China, building an autonomous and controllable REPM industrial system, providing core material support for downstream strategic industries such as electric vehicles, renewable energy, robotics, and accelerating the implementation of the Atmanirbhar Bharat (“Self-Reliance India”) strategy. "(Atmanirbhar Bharat) strategy.

I. Development context and core objectives

Currently India's REPM import dependence is at an extremely high level, with imports reaching 53,700 tons in fiscal year 2025 (April 2024-March 2025), doubling the growth from the previous fiscal year. From the perspective of the global industry pattern, China dominates the global 90% REPM production capacity, superimposed on the supply chain volatility risk brought about by the intensification of geopolitical conflicts, further promoting India to accelerate the localization of REPM layout. At the demand side level, with the continued expansion of the electric vehicle market, renewable energy projects are steadily advancing, coupled with climbing demand for defense equipment, consumer electronics and other fields, it is expected that by 2030, India's REPM market demand will double compared to 2025.

The core objective of this program is to build an integrated REPM production system with an annual capacity of 6,000 tons, to achieve an independent supply of the entire value chain from rare earth oxides to finished sintered magnets, and ultimately to promote India's position as a core participant in the global REPM market.

II. Scale of funding and incentive system

With a total capital investment of Rs. 7.28 billion (approximately $815 million), the program is the single largest incentive investment in the REPM sector in India. The fund allocation framework is clear: Rs. 6.45 billion (about $722 million) for a five-year sales linkage incentive, based on the actual sales performance of the enterprise in order to fully stimulate the market-based production vitality; Rs. 750 million (about $84 million) for capital subsidies, focusing on support for the enterprise to carry out the construction of factories and the procurement of production equipment; the remaining funds will be used for the project administration and the whole process of supervision. The remaining funds will be used for project administration and overall supervision. The remaining funds will be used for project administration and supervision of the entire process. The incentive mechanism adopts the innovative model of “Category 1”, which ensures the efficiency of the use of funds and the effectiveness of inputs and outputs through the dual design of capital support and performance linkage.

III. Implementation mechanisms and timeline

The total capacity of 6,000 tons/year will be allocated to five selected enterprises through global competitive bidding, with a maximum capacity quota of 1,200 tons/year for a single enterprise. The bidding evaluation will focus on the enterprises' technology R&D capability, supply chain integration strength and localization production commitment. The implementation cycle of the program will last for 7 years (calculated from the date of winning the bid), of which the first 2 years will be the construction period, during which the site planning of the integrated manufacturing facilities, equipment installation and commissioning, and trial production will be completed; and the second 5 years will be the incentive period, during which the subsidy funds will be realized on the basis of the actual sales volume of the enterprises. Selected companies are required to commit to practicing the full value chain production model, and shallow participation such as assembly is strictly prohibited. The Department of Heavy Industry and Public Enterprises (DHI) will undertake the program.

The implementation of supervision and management responsibilities, on the one hand, to ensure that the production and operation of enterprises in line with environmental compliance requirements, on the other hand, to promote the development of the industry to drive thousands of jobs added.

In terms of positive impact, it is expected that by 2030, India's local rare earth permanent magnet (REPM) production capacity is expected to meet the domestic market demand of 20% to 30%, which will help India to save tens of billions of dollars in related import funds. At the same time, the construction of this capacity will also effectively stimulate the synergistic development of the upstream and downstream industrial chain of rare earth mining and refining. At the strategic level, this initiative will strengthen India's competitive advantage in the process of global clean energy transformation, provide strong support for the promotion of the “Make in India” strategy, and then attract Japan, Australia and other countries to carry out cooperation and investment in the field of rare earths. On the industrial application side, rare earth permanent magnets, as the core key components of electric vehicle motors and wind turbines, will provide a guarantee for the development of India's electric vehicle industry by increasing its local production capacity, and help the country's electric vehicle production grow from 2 million units in 2025 to 10 million units in 2030.

However, the program to promote the process of challenges should not be underestimated: First, high technical barriers. Rare earth permanent magnet production covers high-precision metallurgical technology and environmentally friendly production process, India's local enterprises need to quickly improve the relevant technology research and development and application capabilities; Second, there is a shortfall in the supply of raw materials. Although India's rare earth reserves ranked fifth in the world, but limited by backward mining and separation technology, the supply of relevant raw materials is difficult to match the demand for production capacity, the need to synchronize the increase in investment in this area; Third, facing fierce competition in the global market. At present, China has a significant price advantage in rare earth permanent magnet production capacity, India needs to improve product quality, the implementation of low-carbon production mode, etc., to achieve differentiated competition in order to break through.

The implementation of the program is a key point in India's transition from a rare earth permanent magnet importer to a manufacturing hub. Specific details of the subsequent tenders will be gradually announced to the public, and the first batch of production facilities is expected to be put into operation in 2027. If the program can be successfully promoted and put into effect, it will significantly enhance India's international voice in the global rare earth permanent magnet industry.

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