Government to Decide on Rare Earth Magnet Production Subsidy Within 20 Days: Minister Kumaraswamy

 The Government of India is expected to take a final decision within the next 15 to 20 days on the launch of a subsidy scheme to support domestic production of rare earth magnets, Union Minister for Heavy Industries and Steel H.D. Kumaraswamy announced on Tuesday. The proposed initiative aims to bolster self-reliance in critical manufacturing materials, particularly in the automotive and electronics sectors.

Stakeholder consultations are currently underway to determine the appropriate quantum of financial support to be offered under the scheme. According to Heavy Industries Secretary Kamran Rizvi, if the total value of incentives surpasses ₹1,000 crore, the proposal will be escalated to the Union Cabinet for approval.

“One Hyderabad-based company has expressed strong interest and committed to delivering 500 tonnes of rare earth magnets by December this year,” Minister Kumaraswamy told reporters. “We’ve held discussions with the Mines Minister, and our ministry is actively working on it. A final decision should be reached within the next two to three weeks.”

The initiative comes in the wake of export restrictions imposed by China on critical metals, which disrupted global supply chains, particularly in sectors such as automobile manufacturing and semiconductor production.

Rizvi added that although full-scale domestic production of rare earth magnets is expected to take around two years to materialize, interim procurement arrangements are being explored with countries like Japan and Vietnam to meet immediate industry demands.

Rare earth magnets—specifically neodymium-iron-boron (NdFeB)—are essential components in high-performance applications such as traction motors for electric vehicles (EVs), power steering systems, and other key assemblies in both EVs and traditional internal combustion engine vehicles.

The proposed subsidy scheme is intended to support investments in processing infrastructure that will enable companies to convert rare earth oxides into finished magnets. Officials noted that Indian Rare Earths Limited (IREL), a public sector unit under the Department of Atomic Energy, currently holds sufficient reserves to support the production of approximately 1,500 tonnes of rare earth magnets.

"The scale of incentives will determine the administrative route of approval," Rizvi clarified. “If it remains below ₹1,000 crore, the heavy industries and finance ministers can approve it directly. For higher amounts, Union Cabinet approval will be required.”

He further noted that stakeholder responses have varied widely, with some companies seeking up to 50% support, while others have requested 20%. “Once we receive competitive bids, we will have a clearer picture of the total financial outlay,” he added.

In a related development, 30 automotive manufacturers recently sought authorisation from the Directorate General of Foreign Trade (DGFT) to import rare earth magnets from China, amid rising concerns of domestic shortages that could hamper production schedules.

The proposed scheme underscores the government’s broader push to enhance domestic value chains in strategic sectors and reduce dependency on imports from a single source.