Government's Announcement On Rare Earth Magnet Subsidy Scheme Expected In 15-20 Days

New Delhi, June 24—The central government is expected to make a final call on the rare earth magnet subsidy scheme to promote rare earth magnets in India. The decision is expected in the next 15-20 days and will be critical as India seeks to reduce dependence on Chinese imports of rare earth magnets. The scheme aims to boost domestic manufacturing of rare earth magnets and develop a resilient and local supply chain for critical components like rare earth magnets, as H. D. Kumaraswamy, Minister of Heavy Industries and Public Enterprises of India, suggested.

The move is part of India’s strategic response to China’s export restrictions on critical minerals, which are disrupting global supply chains in the automotive and semiconductor industries. Japan and other strategic partners also favour India’s joining the rare earth global supply chains.

Subsidy Quantum Under Discussion

According to Kamran Rizvi, Secretary in the Ministry of Heavy Industries, consultations with stakeholders are underway to determine the subsidy amount. The final incentive package will dictate whether the scheme needs Union Cabinet approval.

“If the incentive is under ₹1,000 crore, the minister and the finance minister can approve it. If it exceeds ₹1,000 crore, it will be sent to the Cabinet,” Rizvi explained. He added that industry responses vary, with some stakeholders asking for 50% support, while others seek 20 per cent.

The government plans to allocate subsidies through a competitive bidding process to establish processing units capable of converting rare earth oxides into usable magnets.

Key Industry Participation and Strategic Goals

Kumaraswamy said a Hyderabad-based firm has already expressed strong interest, promising delivery of 500 tonnes of magnets by December 2025. Officials also highlighted that Indian Rare Earth Magnets Ltd, a PSU under the Department of Atomic Energy, holds reserves sufficient to manufacture 1,500 tonnes of magnets.

Rare earth magnets, particularly neodymium-iron-boron (NdFeB), are essential for high-performance automotive components such as electric vehicle traction motors and power steering systems, used in both EVs and conventional vehicles.

Bridging the Gap with Imports and Global Sourcing

Acknowledging the lead time required for domestic production, Rizvi stated that the magnets could take up to two years to be manufactured at scale. In the meantime, the government is working with industry to secure alternative sources from countries like Japan and Vietnam.

Amid ongoing shortages, around 30 automotive companies recently sought authorisation from the Directorate General of Foreign Trade (DGFT) to import rare earth magnets from China to ensure uninterrupted production.

The proposed subsidy scheme is part of India’s broader push for self-reliance in strategic materials and to reduce its vulnerability to global supply shocks. This new scheme is expected to include funding for tech transfer, R&D, and raw material refining capabilities.

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