India Begins Rare-Earth Permanent Magnet Manufacturing Drive In 2026

By the end of this year, India will start producing rare-earth permanent magnets (REPMs) locally. This is a big step towards building capacity in electric vehicles, wind turbines, electronics, and defence systems.

Right now, India relies on imported processed rare earths and high-performance magnets, which exposes domestic manufacturers to risk and price volatility.

The government is working to build a complete domestic value chain, moving from raw material availability to high-tech processing and finished magnet production.

Earlier in November 2025, the government approved a ₹7,280 crore scheme. The programme aims to target 6,000 metric tonnes per annum (MTPA) of integrated rare-earth permanent magnet manufacturing capacity.

This shift comes at a time when global rare earth supply chains remain concentrated in a few countries, making domestic production both an economic and strategic priority.

Why Is Processing A Bottleneck?

India is endowed with a large amount of rare earth resources, with estimated reserves of 6.9 million tonnes, making it one of the most resource-rich countries in the world. Nonetheless, the country produces less than 1% of the worldwide rare earth products, mainly because of a lack of capacity to process them as well as integration of value chains.

To address this gap, four states have been identified for Critical Minerals Processing Units (CMPU). These are Andhra Pradesh, Odisha, Maharashtra and Gujarat. Gujarat has already begun work on setting up facilities. Andhra Pradesh is ready to move ahead. The centre plans to engage with Odisha and Maharashtra to speed up approvals.

Building processing capacity is essential. Without it, India could remain dependent on imports for refined rare earths. This may limit the impact of domestic magnet manufacturing.

How Big Is The Policy Push?

The rare-earth magnet plan is part of a wider national push. The national critical minerals mission has an outlay of ₹32,000 crore. The mission covers the full chain, from exploration to advanced processing.

More than 4,000 critical mineral exploration activities have already started across the country. These are meant to expand the domestic resource base. The government has also identified 9 centres of excellence. These will support research, technology development, and skill creation.

Additional policy support is being extended to the sector. This includes import duty exemptions on raw materials. A separate fund has also been created to support critical mineral development.

How Does Mine Closure Fit In?

The government has identified 143 coal mines for closure. This process will be completed by 2028. The focus is on resource optimisation and sustainable transition.

These closures are meant to free up land and infrastructure. The aim is to repurpose assets in mining regions. Over time, this can support new mineral processing and clean energy projects. The transition also helps shift labour and investment toward critical minerals needed for future industries.

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Key Investor Takeaway

For investors in electric vehicles (EVs), renewables and advanced manufacturing, the start of domestic rare-earth magnet production signals a long-term shift in India’s industrial strategy. The policy push is strong and funding support is in place.

However, commercial success will depend on execution. Processing capacity needs to scale in time. Private investment will need to follow public funding. The key question is whether India can build competitive rare-earth supply chains before global competition for these materials tightens further.

Sources

BusinessStandard

MoneyControl

Times of India