REPM Scheme for 2 December 2025

REPM Scheme Latest News

• To counter China’s overwhelming dominance in rare earth magnet manufacturing, the Indian government has approved a ₹7,280-crore scheme to promote domestic production of rare earth permanent magnets (REPMs).
• REPMs are critical components for EVs, renewable energy systems, electronics, aerospace, and defence. China currently controls over 90% of global REPM manufacturing and processing.
• This gives it significant geopolitical leverage, which it has used during trade disputes.

Why India Needs Urgent Diversification

• India plans large-scale expansion in renewable energy and electric mobility, sharply increasing domestic demand for REPMs.
• The government estimates that India’s magnet consumption will double by 2030.
• However, India imports almost all of its REPM needs, making the country highly vulnerable to external shocks and supply disruptions.
• Also, in April 2025, China imposed export controls on magnets in response to US tariff measures, intensifying global supply concerns.
• The newly approved scheme aims to develop domestic capabilities and reduce over-reliance on China.
• While modest compared to China’s scale, the initiative marks a crucial strategic shift as global stakes rise due to prolonged restrictions and supply chain uncertainty.

Government’s REPM Scheme: What It Aims to Achieve

• The scheme marks the beginning of a long, challenging journey for India.
• The scheme targets creation of 6,000 MTPA of integrated rare earth permanent magnet (REPM) manufacturing capacity. 
• This capacity will be divided among five beneficiaries, each eligible for up to 1,200 MTPA through a competitive bidding process.

Incentives and Financial Support

• Selected companies will receive:
  • ₹6,450 crore in sales-linked incentives over five years
  • ₹750 crore as capital subsidy for setting up integrated facilities
• The financial support is designed to encourage large-scale, commercially viable manufacturing.

Focus on High-Demand NdFeB Magnets

• The scheme prioritises sintered rare-earth permanent magnets, specifically neodymium–iron–boron (NdFeB) magnets, which are the strongest and most widely used.
• These magnets rely on:
  • Light rare-earths: Neodymium (Nd), Praseodymium (Pr)
  • Heavy rare-earths: Dysprosium (Dy), Terbium (Tb) for better high-temperature performance

What Integrated REPM Manufacturing Involves

• The REPM production chain includes:
  • Mining
  • Beneficiation
  • Processing
  • Extraction
  • Refining to rare earth oxides
  • Conversion of oxides to metal
  • Metal to alloy
  • Alloy to magnet
• The scheme will support facilities capable of performing the final three stages:
  • Rare earth oxide → metal
  • Metal → alloy
  • Alloy → rare earth permanent magnet

India’s Heavy Dependence on China

• India imported over 53,000 tonnes of rare earth magnets in 2024–25, with more than 90% coming from China.
• The new scheme aims to reduce this reliance and build domestic capacity, but major challenges remain.

Where India Stands in the Global REPM Landscape

• Outside China, only countries like Japan and Vietnam produce REPMs, and their global share is limited.
• India currently has no commercial-scale manufacturing, only small-scale capabilities at select firms.
• China produces around 2,40,000 tonnes of REPMs annually—far beyond India’s planned 6,000-tonne capacity under the new scheme, underscoring the vast gap.

Raw Material Bottlenecks: A Key Constraint

• India produces some light rare-earth oxides through IREL—such as neodymium–praseodymium (NdPr) oxides—but no heavy rare-earth oxides like dysprosium and terbium.
• These heavy rare earths are essential for high-strength, high-temperature NdFeB magnets.
• Thus, India will still need to import critical raw materials, limiting true self-reliance.

The Scale and Cost Challenge

• China’s dominance comes from:
  • Massive production scale
  • Fully integrated value chain
  • Significant subsidies
• These factors make China’s magnets far cheaper, making cost competitiveness a major hurdle for Indian manufacturers.
• Unless mandated through policy, users are unlikely to buy magnets that are significantly more expensive than Chinese imports.

Global Diversification Efforts Are Growing

• A 2022 US Department of Energy report shows that 93% of the global NdFeB magnet market is dominated by sintered magnets—and China controls almost the entire supply chain, from mining to magnet manufacturing. 
• This has pushed countries worldwide to reduce dependency on China.

International Initiatives to Secure Critical Minerals

• Quad Initiative (2024) - In July, the Quad countries — India, Australia, Japan, and the US — launched a supply chain initiative to secure access to critical minerals, reducing reliance on China.
• G7 Critical Minerals Action Plan (2024) - India endorsed the G7’s Critical Minerals Action Plan, which focuses on building diversified and resilient global supply chains.

India’s National Critical Mineral Mission (NCMM)

• Launched in January 2024 for seven years (2024–25 to 2030–31), the NCMM aims to secure India’s critical mineral supply chain through:
  • Reliable domestic and overseas mineral access
  • Strengthening exploration, processing, and recycling
  • Improving technology, regulation, and financing
• The mission has an outlay of ₹16,300 crore.

Reforming Domestic Mineral Governance

• In 2023, India identified 30 minerals as “critical”.
• The government amended the MMDR Act, 1957, giving the Centre exclusive powers to auction critical and strategic minerals such as lithium, cobalt, and rare earth elements.
• Since the amendment, 34 critical mineral blocks have been auctioned.

Securing Overseas Resources: The Role of KABIL

• India established Khanij Bidesh India Limited (KABIL), a joint venture tasked with identifying and developing critical mineral assets abroad.
• KABIL has signed an agreement with Camyen, a state-owned firm in Catamarca, Argentina, to explore and mine five lithium brine blocks, expanding India’s access to essential battery minerals.

Source: IE | TH