Rare earth permanent magnets (REPMs), some of the strongest types of permanent magnets, made from alloys of rare earth elements, are used in many critical sectors, including electric vehicles, aerospace and renewable energy.
New Delhi currently meets its demand primarily through imports, with the government estimating that the country's needs could double by 2030.
India's cabinet approved on Tuesday a 72.8 billion rupee ($815.3 million) scheme to promote the production of REPMs, which the government said will help secure the "supply chain for domestic industries".
The plan involves offering sales-linked incentives and subsidies to help establish a manufacturing capacity of around 6,000 metric tons per year.
"This first-of-its-kind initiative aims to establish 6,000 MTPA (metric tons per annum) of integrated REPM manufacturing in India, thereby enhancing self-reliance and positioning India as a key player in the global REPM market," the government said in a statement.
Local industry groups welcomed the move, with the Automotive Component Manufacturers Association of India (ACMA) saying it will provide long-term resilience to the automotive supply chain.
It will encourage investments in advanced materials and give India a strong position in global value chains for EVs and clean energy, Vikrampati Singhania, ACMA president, said in a statement.
"This is a strategic and forward-looking intervention that addresses one of the most critical gaps in the EV and advanced mobility ecosystem," he said.
While India sources rare earth magnets from multiple countries, China's export curbs earlier this year raised alarm among some Indian firms.
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