India to Invite Bids for ₹7,280 Crore Rare Earth Magnet Manufacturing Scheme

The Ministry of Heavy Industries is expected to invite bids on March 20 for a ₹7,280 crore scheme focused on rare earth magnet manufacturing. The Request for Proposal (RFP) will cover the production of sintered rare earth permanent magnets (REPM), a key input for several industrial applications. 

The plan targets an annual production capacity of 6,000 metric tonnes. It is intended to support supply needs in sectors such as automobiles, defence and aerospace. 

Programme Design and Timeline 

The scheme is structured over seven years. This includes a two-year period for setting up facilities, followed by five years during which incentives will be linked to sales. 

Production capacity is likely to be divided among five selected companies through a global bidding process. Each player may be allocated up to 1,200 metric tonnes per annum. 

Financial Support Under the Scheme 

The government has allocated ₹6,450 crore as sales-linked incentives to be disbursed over five years. In addition, ₹750 crore has been set aside as capital support for setting up manufacturing units. 

The scheme aims to cover the full production chain. This includes processing rare earth oxides into metals, converting them into alloys, and then manufacturing finished magnets. 

Background and Policy Context 

The Union Cabinet approved the scheme in November 2025 as part of efforts to build domestic capacity. This followed restrictions imposed by China in April 2025 on exports of rare earth permanent magnets. 

These restrictions affected supply chains globally and highlighted India’s reliance on imports for such materials. 

Availability of Raw Materials 

India has the third-largest reserves of rare earth elements. Official data indicates around 7.23 million tonnes of rare earth oxide equivalent in monazite deposits across states including Kerala, Tamil Nadu and Odisha. 

Additional deposits include 1.29 million tonnes in hard rock formations in Gujarat and Rajasthan, along with smaller quantities found in riverbed areas. 

Read More: India’s Bioeconomy Reaches $195 Billion in 2025, Up From $10 Billion in 2014! 

Conclusion 

With defined incentives and production targets, the scheme sets out a framework for developing integrated manufacturing facilities. It aims to address supply gaps in key industrial sectors. 

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