Centre Plans Rs 1,345 Crore Subsidy Scheme to Boost Rare Earth Magnet Production

New Delhi – The Indian government is preparing a ?1,345 crore subsidy scheme aimed at encouraging domestic production of Rare Earth magnets, Union Minister for Heavy Industries, H.D. Kumaraswamy, announced on Friday.

“A scheme proposing a ?1,345 crore subsidy for Rare Earth magnet manufacturers is currently under inter-ministerial consultation. Initially, it envisions support for two manufacturers, though this may change before the scheme is finalized,” the minister said.

According to Kamran Rizvi, Secretary of the Ministry of Heavy Industry, the incentive will be available to manufacturers that carry out end-to-end processing—from Rare Earth oxides to finished magnets. The scheme is expected to benefit both public and private sector players.

“We’re focusing on magnets. Any company that produces magnets will be eligible for incentives. This ?1,345 crore proposal is the initial draft now under review,” Rizvi explained.

Domestic automaker Mahindra & Mahindra and auto component supplier Uno Minda have shown interest in establishing facilities for Rare Earth magnet manufacturing.

At a June meeting with the Ministry of Heavy Industries, Mahindra suggested it could either partner with an established manufacturer or enter into a long-term supply agreement with a local producer. Mahindra is one of India’s leading electric vehicle makers. Uno Minda, meanwhile, is a key supplier to companies like Maruti Suzuki.

The move comes as China, which dominates global Rare Earth magnet production, has imposed export restrictions in response to U.S. tariff hikes—causing supply chain disruptions worldwide.

Rare Earth magnets are vital components in a wide range of technologies, including electric vehicles, wind turbines, consumer electronics, and industrial machinery. Their compact size and powerful magnetic properties make them essential for use in EV motors, MRI machines, computer hard drives, headphones, and loudspeakers.

With inputs from  IANS