India has authorised final approval for a programme to establish an integrated manufacturing base for sintered rare earth permanent magnets. The plan commits INR72.8bn ($815mn) to create facilities capable of producing 6000 metric tonnes per annum of magnets, a move designed to reduce reliance on foreign suppliers and position the country more competitively in critical materials.

Rare earth permanent magnets are indispensable for electric vehicles, renewable power technologies, advanced electronics, aerospace systems and defence platforms. The initiative will support the entire production chain, from converting rare earth oxides into metals, then into alloys, and finally finished magnets suitable for industrial use. The government intends to select as many as five beneficiaries through a global bidding process, with each firm able to secure up to 1200 metric tonnes per annum of manufacturing capacity.

According to a press release by India’s Press Information Bureau, the scheme will run for seven years from the date of award, comprising a two-year period for facility installation followed by five years of incentive payments. New capacity is expected to support India’s plans to meet surging demand from electric mobility, consumer electronics and renewable energy sectors, where magnet consumption is projected to double by 2030 relative to 2025.

Until now the country has imported the bulk of its requirement. Although India hosts sizeable rare earth resources, the country has long faced a strategic gap in converting these minerals into high grade magnets. This vulnerability stems from limited domestic processing, dependence on imported intermediate materials and the near-monopoly held by foreign producers in downstream rare Earth technologies.

Domestic industries often contend with price volatility triggered by geopolitical tensions, export restrictions or supply disruptions from major suppliers. For electric vehicle(EV) manufacturers, this creates uncertainty around motor design and long-term sourcing arrangements, while renewable-energy developers face risks when procuring magnets for wind-turbine generators. Defence programmes that rely on precision engineered components also remain exposed to delays if overseas shipments are interrupted.

Furthermore, importing such crucial components for strategic systems can introduce the risk of sabotage at a very early stage in the arsenal that the defence systems will make up, especially if the supplier is an adversary as is the case for India with China being its main supplier for rare earth magnets.

India’s refining and metallisation capacity has historically lagged due to high capital requirements, environmental compliance costs and the absence of integrated processing infrastructure. The high capital investments and regulatory burden has deferred several sources of green field investment and pretty much kept the status quo intact. As a result, manufacturers typically rely on external suppliers for alloys and finished magnets, constraining value addition within the domestic economy. By establishing an integrated ecosystem, the new initiative aims to curb these vulnerabilities, reduce exposure to concentrated supply chains and build resilience against global market shocks.

However, money may not always be the answer as China can restrict the supply of processing equipment the supply and value chain for which it also controls globally, as was the case until end of October 2025 when some Indian companies were granted licenses to import rare earths and processing equipment as well as finished magnets which avoided the supply chain disruption for those companies at least temporarily.