India’s rare-earth push: Building strategic independence beyond semiconductors
The next big industrial story in India may not be found inside a semiconductor clean room. It could be hidden inside something much smaller: a permanent magnet.
These compact components are essential to the motors of electric vehicles, wind turbines, advanced electronics, aerospace platforms and defence systems. Their importance has grown alongside the global shift towards electrification, automation and high-technology manufacturing.
India is now moving decisively to build a domestic ecosystem around them. The latest signal came in August, when the Ministry of Heavy Industries received 20 bids from companies seeking to establish integrated rare-earth permanent magnet manufacturing facilities in India.
The bidders include Larsen & Toubro, Coal India, ReNew, Attero Recycling, 20 Microns, Lohum Magnets & Energy Solutions, NEO Performance Materials of Singapore and Proterial India, among others. The technical bids were opened on August 13 after the August 12 submission deadline.
The response has given fresh momentum to a policy effort that goes beyond securing a raw material. It is about creating the industrial capacity to convert India’s rare-earth resources into high-value products needed by some of the country’s fastest-growing sectors.
Magnets become strategic assets
Rare-earth permanent magnets are among the most powerful available and are used where high strength, compact size, and efficiency are essential. Electric motors, wind turbines, sophisticated electronic equipment, aerospace platforms and defence systems all rely on these materials.
The most important category for India’s industrial ambitions is sintered neodymium-iron-boron, or NdFeB, magnets. Neodymium and praseodymium, commonly referred to as NdPr, form an important part of the production chain.
The government’s objective is not simply to increase the extraction of rare-earth minerals. It is to create an integrated chain stretching from NdPr oxide to finished magnets.
That distinction is important. India’s broader critical-mineral strategy increasingly focuses on value addition, processing and manufacturing rather than stopping at the extraction stage. The Ministry of Heavy Industries’ latest initiative provides a clear example of that approach.
A $7.74 billion industrial bet
The Union Cabinet approved the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnet in November 2025 with a financial outlay of $7.74 billion (₹7,280 crore). The scheme targets 6,000 metric tonnes per annum of integrated REPM manufacturing capacity in India.
The capacity will be allocated among up to five beneficiaries selected through global competitive bidding, with each beneficiary eligible for up to 1,200 MTPA.
The scheme has a seven-year duration from the date of award. It provides for two years to establish the manufacturing facilities, followed by five years of incentive disbursement linked to the sale of rare-earth permanent magnets.
The financial architecture includes $6.86 billion (₹6,450 crore) in sales-linked incentives and a capital subsidy of $776.6 million (₹730 crore), according to the government’s scheme details.
The design places production at the centre of the programme. Rather than focusing solely on creating facilities, it links government support to the actual manufacture and sale of magnets.
Twenty bids signal momentum
The response to the global tender has strengthened the programme’s industrial dimension.
Twenty companies and consortia submitted bids, bringing together established engineering companies, public-sector enterprises, recycling specialists, energy companies, magnet manufacturers and international participants.
The list includes Larsen & Toubro, Coal India, ReNew, Attero Recycling, 20 Microns, Lohum Magnets & Energy Solutions, NEO Performance Materials of Singapore, Proterial India and Prozeal Green Energy.
The bidding process itself reflects the government’s attempt to create capacity through competitive selection. The Ministry of Heavy Industries issued the request for proposal on March 20, 2026, and subsequently extended the submission timeline to August 12 to facilitate wider participation.
The 20 bids now provide the basis for selecting manufacturers that will contribute to the targeted 6,000-MTPA domestic capacity. For India, the significance extends beyond the number of plants eventually selected. The participation of companies from different industrial backgrounds indicates that rare-earth processing and magnet manufacturing are increasingly being viewed as part of a wider industrial opportunity.
Resources meet manufacturing
India already possesses substantial rare-earth resources. According to the Atomic Minerals Directorate for Exploration and Research, the country has approximately 7.23 million tonnes of rare-earth oxide equivalent contained in 13.15 million tonnes of monazite resources.
A further 1.29 million tonnes of in-situ rare-earth resources have been identified in hard-rock terrains in Gujarat and Rajasthan. These resources occur across several states, including Odisha, Andhra Pradesh, Tamil Nadu, Kerala, Maharashtra, Gujarat, Jharkhand and West Bengal.
India’s policy emphasis is now shifting towards connecting these resources with industrial value chains.Government assessments have identified a significant gap between upstream capabilities and industrial-scale midstream and downstream manufacturing.
India has capabilities in mining, separation and refining rare-earth oxides, while the new REPM programme is intended to establish the industrial stages required to turn those materials into finished magnets.
The result could be a more complete domestic chain, with value being created at multiple stages rather than concentrated around raw materials.
Critical minerals get bigger push
The rare-earth initiative forms part of a much wider national strategy. The National Critical Mineral Mission, approved in January 2025, was created to establish a framework for securing critical minerals and strengthening the value chain from exploration and mining through beneficiation, processing and recovery from end-of-life products.
The mission has an expenditure of $17.34 billion (₹16,300 crore), with an expected investment of another $19.15 billion (₹18,000 crore) from public-sector enterprises and other stakeholders. The Geological Survey of India has been tasked with carrying out 1,200 exploration projects between 2024-25 and 2030-31.
The programme is already expanding India’s mineral exploration base. By June 2026, the Ministry of Mines said 56 critical and strategic mineral blocks had been successfully auctioned. Separate exploration programmes are also examining rare-earth resources in coastal sands, inland placer deposits and hard-rock formations.
Rare earths join technology
The timing of the rare-earth push is closely connected to India’s broader technology and manufacturing ambitions. The country has spent the past decade building capacity in mobile phones and electronics and is now expanding into semiconductors, electric mobility, renewable energy equipment and advanced manufacturing.
Permanent magnets sit at the intersection of many of these sectors. An electric vehicle requires efficient motors. Wind turbines depend on powerful generators. Advanced electronics require compact high-performance components. Aerospace and defence platforms use specialised systems in which size, weight and efficiency matter.
A domestic magnet industry can connect several strategic manufacturing priorities at once. This is also why the rare-earth programme complements, rather than competes with, India’s semiconductor strategy. Semiconductors provide the electronic intelligence behind modern systems, while permanent magnets provide critical physical components for motors, generators and other advanced equipment. Together, they represent different layers of the same technology-driven industrial ecosystem.
Corridors add industrial scale
The policy push is also acquiring a geographical dimension. The Union Budget 2026-27 announced dedicated rare-earth corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu for mining, processing, research and manufacturing of rare-earth permanent magnets.
These corridors are intended to bring different stages of the value chain closer together, linking resource availability with processing, research and manufacturing capabilities.
Such an approach can give rare-earth production a more organised industrial structure, while also creating opportunities for supporting industries, technology development and specialised manufacturing.
The government’s strategy is consequently moving from individual projects towards an ecosystem model.
Building a deeper ecosystem
Another significant development has come from Indian Rare Earths Limited, which has opened technologies related to rare-earth and titanium applications for commercialisation.
The technology-transfer package includes process know-how, engineering information, equipment specifications, quality-assurance protocols and training for technical personnel.
This creates another link between government-owned technical capabilities and commercial manufacturing.
The larger policy architecture is beginning to cover exploration, extraction, separation, refining, technology transfer, magnet production, recycling and end-use industries. That breadth is what gives India’s rare-earth strategy its significance.
From resources to industrial power
India’s rare-earth push represents a new chapter in its manufacturing story. The semiconductor drive is building capabilities around chips and advanced electronics. The rare-earth programme addresses another essential layer: the specialised materials and components that allow modern machines, vehicles, generators and defence systems to function.
The immediate milestone is the selection of manufacturers from the 20 bids received under the $7.74 billion (₹7,280-crore) scheme. he longer-term objective is considerably broader to establish 6,000 MTPA of integrated permanent-magnet capacity and connect it with India’s emerging critical-mineral, clean-energy, electronics and advanced-manufacturing ecosystems.
India’s rare-earth strategy is increasingly about turning geological resources into industrial capability. The movement from mineral deposits to processed oxides, from oxides to alloys and from alloys to finished magnets represents precisely the kind of value addition that can deepen domestic manufacturing.
Beyond the semiconductor, electronics and electric-mobility stories, another strategic industrial chain is now taking shape — one built around materials that are small in physical size but increasingly important to the technologies defining the global economy.
