₹1,345 cr subsidy scheme for rare earth magnet makers proposed: Heavy Industry Minister Kumaraswamy

"A scheme has been circulated for Rs 1,345 crore subsidy for manufacturers of rare earth magnets. It is currently under inter-ministerial consultation. It is proposed that there will be two manufacturers as of now, however this could change by the time the scheme is ready," said Kumaraswamy.

Kamran Rizvi, Secretary at the Ministry of Heavy Industry, stated that only those manufacturers who carry out end-to-end processing—from rare earth oxides to finished magnets—will be eligible for the subsidy.

The scheme, as proposed, is likely to include both private companies and public sector enterprises, and will provide incentives for setting up domestic production capacity across the entire value chain.

This development follows China’s decision in April to impose export restrictions on seven rare earth elements and finished magnets.

Under the new rules, Chinese exporters are required to obtain licences and submit end-use declarations, confirming the materials won’t be used for defence purposes or re-exported to the United States.

Rare earth magnets play a critical role in the manufacturing of permanent magnet synchronous motors (PMSMs), which are used in electric vehicles (EVs).

Hybrid vehicles also rely on them for efficient propulsion, while in internal combustion engine (ICE) vehicles, their application is generally limited to electric power steering and other motorised systems.