India has moved to strengthen its position in critical minerals by laying out a coordinated strategy for rare earth development that combines domestic manufacturing incentives, corridor-based industrial clustering and international partnerships. The approach, articulated through policy decisions taken in late 2025 and the Union Budget 2026–27, seeks to reduce import dependence in Rare Earth Permanent Magnets (REPMs) and integrate India more firmly into global advanced-materials value chains.

The centrepiece of this strategy is a ₹7,280 crore REPM Manufacturing Scheme approved in November 2025, complemented by the announcement of Dedicated Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh and Tamil Nadu. Together, these measures aim to create end-to-end capacity across mining, processing, research and manufacturing, while supporting sectors such as electric mobility, renewable energy, electronics, aerospace and defence.

Growing importance of rare earth permanent magnets

Rare Earth Permanent Magnets are among the most critical inputs in modern manufacturing and clean-energy technologies. Their high magnetic strength and stability allow compact and efficient designs, making them indispensable for electric vehicle motors, wind turbine generators, industrial automation systems, consumer electronics, aerospace platforms and defence equipment.

As India scales up electric mobility and renewable energy capacity, the role of REPMs has become more prominent. Wind turbines and electric vehicles rely heavily on these magnets for efficiency and performance, while defence and aerospace applications require assured access to critical components. This growing dependence has brought supply security into sharp focus.

Import dependence and future demand

Despite having a sizeable rare-earth resource base, India remains heavily dependent on imports for permanent magnets. Between 2022 and 2025, China accounted for nearly 60–80 per cent of imports by value and 85–90 per cent by quantity. This concentration has raised concerns about supply risks, particularly as global demand accelerates.

Industry estimates indicate that India’s consumption of rare earth permanent magnets could double by 2030, driven by rapid growth in electric vehicles, renewable energy installations, electronics manufacturing and defence production. Without domestic capacity, this demand growth would translate into higher imports and increased vulnerability to global supply disruptions.

REPM Manufacturing Scheme: building domestic capacity

To address these challenges, the government approved a ₹7,280 crore scheme to establish an integrated domestic manufacturing ecosystem for REPMs. The scheme aims to create 6,000 metric tonnes per annum (MTPA) of sintered magnet capacity through up to five manufacturing units selected via global competitive bidding.

The incentive structure is designed to encourage both capacity creation and sustained production. Of the total outlay, ₹6,450 crore has been earmarked as sales-linked incentives to be disbursed over five years, while ₹750 crore has been allocated as capital subsidy to support advanced manufacturing facilities. The scheme allows a two-year gestation period for plant setup, followed by production-linked incentives.

The objective is to build an end-to-end value chain covering rare-earth oxides, alloys and finished magnets, ensuring reliable supply for domestic industries such as electric mobility, renewable energy, electronics, aerospace and defence.

Budget 2026–27 and corridor-based development

The Union Budget 2026–27 reinforced the manufacturing push by announcing Dedicated Rare Earth Corridors in four states—Odisha, Kerala, Andhra Pradesh and Tamil Nadu. These corridors are intended to cluster mining, processing, research and manufacturing activities within defined geographies, leveraging the mineral-rich base of these regions.

The corridor approach is expected to improve coordination across the value chain, reduce logistical bottlenecks and support faster scaling of projects. By linking upstream mineral extraction with downstream manufacturing and research facilities, the corridors aim to create localised ecosystems that can support both domestic demand and exports.

Leveraging existing public sector infrastructure

The corridor initiative aligns with the existing presence of IREL (India) Limited, which operates under the Department of Atomic Energy. IREL has been active in mineral processing since 1963 and currently operates with a processing capacity of about 10 lakh tonnes per annum.

Its portfolio includes the production of ilmenite, rutile, zircon, sillimanite and garnet. Importantly, IREL runs a rare earth extraction plant in Odisha and a rare earth refining unit at Aluva in Kerala. These facilities are directly aligned with the proposed corridors and provide an operational base for scaling rare earth processing and downstream manufacturing.

Integrating IREL’s existing infrastructure with new private and public investments is expected to accelerate capacity creation and reduce the lead time for setting up new facilities.

India’s rare earth resource base

India’s policy push is supported by a substantial geological base. The country holds an estimated 13.15 million tonnes of monazite, containing around 7.23 million tonnes of rare-earth oxides. These deposits are spread across several states, primarily in coastal beach sands, teri or red sands and inland alluvium.

In addition, around 1.29 million tonnes of in-situ rare-earth oxide resources have been identified in hard-rock areas of Gujarat and Rajasthan. Exploration efforts have further expanded the assessed resource base. The Geological Survey of India has identified 482.6 million tonnes of rare-earth ore resources across 34 exploration projects, strengthening the case for long-term domestic supply.

While these resources provide a strong foundation, policymakers have noted that the key challenge lies in translating geological potential into downstream manufacturing capability.

Alignment with national priorities

The rare earth initiatives are closely aligned with broader national priorities. Reducing import dependence is central to the goal of self-reliance, particularly in sectors where supply disruptions can have wide economic and strategic implications.

Rare earth magnets are also essential for India’s clean energy transition. Electric vehicles and wind power are central to the country’s renewable energy roadmap and its Net Zero 2070 commitment. Ensuring domestic access to these materials allows mineral-rich states to directly contribute to the energy transition.

In defence and aerospace, domestic availability of REPMs supports strategic autonomy by reducing exposure to external supply shocks and geopolitical uncertainties.

Policy reforms supporting critical minerals

Recent regulatory reforms have created a more enabling environment for rare earth development. Amendments to the Mines and Minerals (Development and Regulation) Act in 2023 introduced a dedicated list of critical minerals and opened exploration and mining to greater private participation.

These reforms are complemented by the National Critical Minerals Mission, approved in January 2025, which aims to secure sustainable supply chains for rare earths and other strategic minerals. The REPM Manufacturing Scheme and corridor-based development are positioned as operational components of this broader framework.

Global partnerships and overseas assets

India’s rare earth strategy also includes a strong international dimension. The Ministry of Mines has entered into bilateral agreements with mineral-rich countries such as Australia, Argentina, Zambia, Mozambique, Peru, Zimbabwe, Malawi and Côte d’Ivoire to secure long-term access to critical minerals.

At the multilateral level, India participates in the Minerals Security Partnership and the Indo-Pacific Economic Framework, both of which focus on diversifying global supply chains and promoting cooperation in clean energy and critical minerals.

A key institutional vehicle for overseas engagement is Khanij Bidesh India Limited, a joint venture of National Aluminium Company, Hindustan Copper and Mineral Exploration & Consultancy. KABIL’s mandate is to acquire and develop mineral assets abroad to strengthen domestic value chains. Its agreement with CAMYEN in Argentina for lithium brine exploration illustrates the approach of combining domestic manufacturing with overseas resource access.

Outlook

India’s rare earth strategy marks a shift toward a structured and long-term approach to critical mineral security. The ₹7,280 crore REPM Manufacturing Scheme and the corridor announcements in the Union Budget 2026–27 together aim to bridge the gap between resource availability and downstream manufacturing.

Execution will depend on coordination between central and state governments, timely project approvals, environmental management and access to technology and skilled manpower. With demand for rare earth magnets expected to rise sharply over the next decade, the success of these initiatives will shape India’s role in advanced manufacturing, clean energy and strategic industries.

By combining domestic capacity building with global partnerships, India is positioning itself as a participant in global advanced-materials value chains rather than a passive importer of critical components.

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