CarpeDiem IAS • CarpeDiem IAS • CarpeDiem IAS •

Rare Earth Permanent Magnet (REPM) Scheme

04 Dec 2025 GS 3 Economy
Rare Earth Permanent Magnet (REPM) Scheme Click to view full image

Context

  • India has approved a Rs 7,280-crore scheme to promote domestic manufacturing of rare earth permanent magnets (REPM).

  • Comes amid China’s overwhelming dominance in REPM processing and manufacturing.

  • Aim: enhance self-reliance, reduce import dependence, strengthen supply-chain resilience, and support strategic sectors like EVs, renewable energy, aerospace and defence.

India’s Import Dependence

  • During 2024–25, India imported 53,000+ tonnes of rare earth magnets.

  • Over 90% of imports came from China.

  • India currently has no commercial-scale REPM manufacturing.

Why REPMs Matter

  • Key to:

    • Electric vehicles

    • Wind turbines

    • Electronics

    • Aerospace and defence

    • Robotics and advanced manufacturing

  • China controls:

    • 90% of global manufacturing and processing

    • Strong leverage in geopolitical trade tensions

    • Recently imposed export controls (April 2025)

Features of India’s REPM Scheme

1. Capacity creation

  • Target: 6,000 MTPA integrated REPM manufacturing capacity.

  • 5 beneficiaries; 1,200 MTPA per applicant.

2. Incentives

  • Sales-linked incentives: Rs 6,450 crore over 5 years.

  • Capital subsidy: Rs 750 crore for facility setup.

3. Scope

  • Focus on sintered REPMs, especially:

    • NdFeB (Neodymium–Iron–Boron) magnets.

  • Supported stages of value chain:

    • Rare earth oxide → metal

    • Metal → alloy

    • Alloy → magnet manufacturing

4. Rare earth composition

  • Light rare earths: Neodymium (Nd), Praseodymium (Pr)

  • Heavy rare earths (for high-temperature performance): Dysprosium (Dy), Terbium (Tb)

India’s Current Position in the Global Supply Chain

Manufacturing gap

  • China’s annual REPM capacity: ~2,40,000 tonnes

  • India’s scheme target: 6,000 tonnes → extremely modest in comparison.

Raw material constraint

  • India produces some light rare earth oxides (NdPr) via IREL.

  • India produces zero heavy rare earth oxides → must import Dy and Tb.

  • IREL’s current output cannot support large-scale REPM manufacturing.

Cost challenge

  • China’s:

    • Scale

    • Value chain integration

    • Subsidies

    • Environmental externalisation

  • → makes its magnets cost-competitive; others struggle to match prices.

Global Efforts to Reduce China Dependence

  • Japan & Vietnam produce REPMs but in small share.

  • Quad Initiative (2024): India–US–Japan–Australia collaboration on securing critical mineral supply chains.

  • G7 Critical Minerals Action Plan (2024) endorsed by India.

India’s Initiatives for Critical Mineral Security

1. National Critical Mineral Mission (NCMM) – 2024–25 to 2030–31

  • Outlay: Rs 16,300 crore.

  • Goals:

    • Secure critical mineral supply chains

    • Strengthen exploration, mining, processing and recycling

2. Critical Mineral List (2023)

  • India identified 30 critical minerals.

3. MMDR Amendment Act, 2023

  • Gave Centre exclusive power to auction critical and strategic minerals, incl. lithium, cobalt and rare earth elements.

4. Overseas asset acquisition – KABIL

  • Khanij Bidesh India Limited exploring mineral assets abroad.

  • Signed agreement with Camyen (Argentina) for exploration of five lithium brine blocks.

Can the Scheme Make India Self-Reliant?

Strengths

  • First major domestic push into REPM manufacturing

  • Supports local value chain development

  • Aligns with EV, renewable energy and defence ambitions

Limitations

  • Target capacity much smaller than China’s

  • Dependence on imports for heavy rare earths will continue

  • Higher production costs may weaken competitiveness

  • Full self-reliance possible only with:

    • Domestic mining

    • Heavy rare earth refining

    • Significant scaling up

    • Technology partnerships


Related news:

Prelims Practice MCQs

Q. The newly approved REPM scheme primarily focuses on the production of:

A. Samarium–Cobalt magnets
B. Sintered NdFeB magnets
C. Flexible ferrite magnets
D. Alnico magnets

Correct answer: B
Explanation: The scheme targets sintered rare earth permanent magnets, especially NdFeB type which dominate the global market.

Q. Which of the following heavy rare-earth elements are critical for improving high-temperature performance of REPMs?

A. Cerium and lanthanum
B. Yttrium and scandium
C. Dysprosium and terbium
D. Europium and gadolinium

Correct answer: C

Q. Which Indian entity currently produces some light rare-earth oxides like NdPr?

A. NMDC
B. Hindustan Copper Limited
C. Indian Rare Earths Limited (IREL)
D. NALCO

Correct answer: C

Q. Khanij Bidesh India Limited (KABIL) has recently collaborated with Argentina for exploration of:

A. Rare earth ore mines
B. Graphite deposits
C. Lithium brine blocks
D. Cobalt laterite mines

Correct answer: C



← Back to list