The Union Cabinet’s approval of a Rs 7,280 crore scheme to promote manufacturing of sintered rare earth permanent magnets (REPM) will help address a crucial missing link in India’s electric vehicle (EV) and chip supply chains, electronics and semiconductor industry executives said.
The programme aims to create 6,000 metric tonnes per annum of integrated REPM capacity through five globally bid projects, backed by sales-linked incentives and capital subsidy over a seven-year period.
Under the scheme, India will, for the first time, support end-to-end REPM manufacturing, from rare earth oxides to metals, alloys and finished magnets, in order to cut import dependence and serve fast-growing demand from EVs, renewables, industrial electronics and defence.
The government has earmarked Rs 6,450 crore for sales-linked incentives over five years and Rs 750 crore as capital support to set up the targeted 6,000 metric tonnes per annum capacity, with each of the five selected players expected to get up to 1,200 metric tonnes per annum.
Officials expect India’s REPM consumption to roughly double between 2025 and 2030, driven primarily by EVs and clean energy, making domestic capacity critical to supply chain security and the country’s Net Zero 2070 roadmap.
The scheme’s seven-year timeline includes a two-year gestation period for plants to come up, followed by five years of incentive disbursal linked to magnet sales.
Supply chain impact
The REPM scheme complements ongoing semiconductor and electronics initiatives by addressing a core upstream vulnerability in India’s EV and chip ecosystem, said industry executives.
Mayank Shrivastava, a professor at the Indian Institute of Science, Bengaluru and cofounder of AGNIT Semiconductors that specialises in gallium nitride semiconductor technology, said the programme is “as critical as building fabs”. This is because advanced electronics depends on magnetic materials as much as on silicon, and the initiative shores up a key weak link in the country’s electronics supply chain.
Rajoo Goel, secretary-general of the Electronic Industries Association of India, called the government scheme a first of its kind initiative focused on the core of the supply chain for electronics. Rare earth magnets are the strongest type of permanent magnet available, making them critical for emerging technology applications like electric motors for vehicles, defence and aerospace, renewable energy, computer hard drives and smaller electronics such as smartphones, he said.
These magnets are efficient, long-lasting, and have higher resistance to corrosion and high temperatures, he explained. With rapidly growing demand for electronic products and technology, magnets and inputs made of rare earth materials have become critical, he added.
The electronics industry is becoming increasingly dependent on the same and the countries which control their supply chain and technology have a geopolitical advantage and can dictate terms to the rest of the world, Goel said.
Vivek Tyagi, executive council member at the India Electronics and Semiconductor Association, said the scheme could quickly reduce import dependence for two- and three-wheeler manufacturers while also benefiting four-wheeler players over time.
Several executives view the move as a logical follow-on to the Ministry of Electronics and Information Technology's India Semiconductor Mission, aligning magnet manufacturing incentives with policies to attract chip fabs and advanced packaging units.
New investments in Andhra Pradesh
The policy push comes as Andhra Pradesh emerges as a hub for downstream electronics and semiconductor manufacturing linked to EVs and industrial applications.
Advanced System in Package (ASIP) Technologies is setting up an outsourced semiconductor assembly and test facility in the state in partnership with South Korea’s APACT, with an initial investment of Rs 468 crore.
Chennai-based Syrma SGS, through its unit Syrma Strategic Electronics, is also building a Rs 765 crore multilayer printed circuit board (PCB) plant in Andhra Pradesh under the Centre’s electronic component manufacturing scheme, strengthening local PCB availability for automotive and industrial original equipment manufacturers.
ASIP Technologies chief executive Venkata Simhadri said the rapid transition to EV two-wheelers and four-wheelers makes it “very important for India to create the local ecosystem and supply chain”, pointing to both semiconductors and REPMs as key components in the new mobility stack.
He highlighted that the REPM scheme, along with ISM incentives for fabs and advanced packaging, addresses crucial elements of the EV supply chain, from permanent magnet motors on the mechanical side to compound semiconductor-based motor control and battery charging systems on the electronics side.
Supply security gains
While many electronics manufacturing services (EMS) players do not directly process rare earth materials, they expect second-order benefits from improved magnet availability.
Syrma SGS managing director Jasbir Singh Gujral said REPMs are critical inputs for EV and semiconductor industries, and a domestic magnet ecosystem will indirectly help EMS companies by making the supply of magnet-based components more predictable and reducing the risk of supply chain disruptions.
Syrma’s own operations rely on components made using REPMs, rather than raw magnets themselves, so greater upstream resilience should translate into smoother sourcing for finished parts, he said.
"It's a very well curated scheme that is coming at the apt time. It's going to take some time for these capacities to get created but the reactions I'm getting from my peers are quite positive," an EMS company executive said on the condition of anonymity.
"There is a belief that the investments are going to come in. And this is again de-risking from the borderland country which is absolutely prudent," he said.
For fabless firms such as BigEndian Semiconductors, which designs custom system-on-chip (SoC) solutions from its Bengaluru base while partnering with a foundry in Taiwan, the scheme stresses India’s intent to build deeper hardware value chains.
Cofounder and chief executive Sunil Kumar cautioned that gestation-heavy incentive schemes tend to favour already established large organisations. However, innovation often comes from smaller challengers, making it important for policy to be calibrated to company size, he argued.
MSME opportunities
Academia and skill-development experts expect the REPM scheme to catalyse new electronics manufacturing clusters, particularly for micro, small, and medium enterprises (MSMEs) and startups in advanced materials and magnet-based components.
T Senthil Siva Subramanian, who heads the Institute Industry Interface programme at Hindustan College of Science and Technology in Mathura, said the scheme can help create MSME-focused electronics clusters that bridge lab-to-market gaps, generate new job roles through skilling, and encourage startups in REPM and related applications.
He added that such clusters can feed into broader initiatives like “Vocal for Local” and “One District One Product” by nurturing “swadeshi” proof-of-concepts, while also advancing UN Sustainable Development Goals related to industry, innovation, infrastructure and climate action.
Strategic and innovation lens
Experts argue that domestic REPM capacity carries strategic weight beyond EVs, given its applications in defence, medical devices, nuclear research reactors and precision agriculture equipment.
Subramanian pointed out that magnets such as samarium-cobalt and neodymium-iron-boron are critical across defence security systems, electronic traction motors, therapeutic medical equipment, nuclear research reactors and electronic farm machinery, and that local design and production capabilities can enhance India’s strategic autonomy and global ranking in high-tech manufacturing.
He also expects the scheme to spur intangible investments in design tools, miniaturised products, software and intellectual property around rare earth magnets, boosting India’s standing in global innovation indices and helping domestic products progress across technology, customer, manufacturing and investment readiness levels.
For policymakers and industry, the REPM push is increasingly seen as a foundational layer that strengthens everything from chip packaging and compound semiconductors to EVs, robotics and flexible electronics.
(With inputs from Dia Rekhi in Chennai)
The programme aims to create 6,000 metric tonnes per annum of integrated REPM capacity through five globally bid projects, backed by sales-linked incentives and capital subsidy over a seven-year period.
Under the scheme, India will, for the first time, support end-to-end REPM manufacturing, from rare earth oxides to metals, alloys and finished magnets, in order to cut import dependence and serve fast-growing demand from EVs, renewables, industrial electronics and defence.
The government has earmarked Rs 6,450 crore for sales-linked incentives over five years and Rs 750 crore as capital support to set up the targeted 6,000 metric tonnes per annum capacity, with each of the five selected players expected to get up to 1,200 metric tonnes per annum.
Officials expect India’s REPM consumption to roughly double between 2025 and 2030, driven primarily by EVs and clean energy, making domestic capacity critical to supply chain security and the country’s Net Zero 2070 roadmap.
The scheme’s seven-year timeline includes a two-year gestation period for plants to come up, followed by five years of incentive disbursal linked to magnet sales.
Supply chain impact
The REPM scheme complements ongoing semiconductor and electronics initiatives by addressing a core upstream vulnerability in India’s EV and chip ecosystem, said industry executives.
Mayank Shrivastava, a professor at the Indian Institute of Science, Bengaluru and cofounder of AGNIT Semiconductors that specialises in gallium nitride semiconductor technology, said the programme is “as critical as building fabs”. This is because advanced electronics depends on magnetic materials as much as on silicon, and the initiative shores up a key weak link in the country’s electronics supply chain.
Rajoo Goel, secretary-general of the Electronic Industries Association of India, called the government scheme a first of its kind initiative focused on the core of the supply chain for electronics. Rare earth magnets are the strongest type of permanent magnet available, making them critical for emerging technology applications like electric motors for vehicles, defence and aerospace, renewable energy, computer hard drives and smaller electronics such as smartphones, he said.
These magnets are efficient, long-lasting, and have higher resistance to corrosion and high temperatures, he explained. With rapidly growing demand for electronic products and technology, magnets and inputs made of rare earth materials have become critical, he added.
The electronics industry is becoming increasingly dependent on the same and the countries which control their supply chain and technology have a geopolitical advantage and can dictate terms to the rest of the world, Goel said.
Vivek Tyagi, executive council member at the India Electronics and Semiconductor Association, said the scheme could quickly reduce import dependence for two- and three-wheeler manufacturers while also benefiting four-wheeler players over time.
Several executives view the move as a logical follow-on to the Ministry of Electronics and Information Technology's India Semiconductor Mission, aligning magnet manufacturing incentives with policies to attract chip fabs and advanced packaging units.
New investments in Andhra Pradesh
The policy push comes as Andhra Pradesh emerges as a hub for downstream electronics and semiconductor manufacturing linked to EVs and industrial applications.
Advanced System in Package (ASIP) Technologies is setting up an outsourced semiconductor assembly and test facility in the state in partnership with South Korea’s APACT, with an initial investment of Rs 468 crore.
Chennai-based Syrma SGS, through its unit Syrma Strategic Electronics, is also building a Rs 765 crore multilayer printed circuit board (PCB) plant in Andhra Pradesh under the Centre’s electronic component manufacturing scheme, strengthening local PCB availability for automotive and industrial original equipment manufacturers.
ASIP Technologies chief executive Venkata Simhadri said the rapid transition to EV two-wheelers and four-wheelers makes it “very important for India to create the local ecosystem and supply chain”, pointing to both semiconductors and REPMs as key components in the new mobility stack.
He highlighted that the REPM scheme, along with ISM incentives for fabs and advanced packaging, addresses crucial elements of the EV supply chain, from permanent magnet motors on the mechanical side to compound semiconductor-based motor control and battery charging systems on the electronics side.
Supply security gains
While many electronics manufacturing services (EMS) players do not directly process rare earth materials, they expect second-order benefits from improved magnet availability.
Syrma SGS managing director Jasbir Singh Gujral said REPMs are critical inputs for EV and semiconductor industries, and a domestic magnet ecosystem will indirectly help EMS companies by making the supply of magnet-based components more predictable and reducing the risk of supply chain disruptions.
Syrma’s own operations rely on components made using REPMs, rather than raw magnets themselves, so greater upstream resilience should translate into smoother sourcing for finished parts, he said.
"It's a very well curated scheme that is coming at the apt time. It's going to take some time for these capacities to get created but the reactions I'm getting from my peers are quite positive," an EMS company executive said on the condition of anonymity.
"There is a belief that the investments are going to come in. And this is again de-risking from the borderland country which is absolutely prudent," he said.
For fabless firms such as BigEndian Semiconductors, which designs custom system-on-chip (SoC) solutions from its Bengaluru base while partnering with a foundry in Taiwan, the scheme stresses India’s intent to build deeper hardware value chains.
Cofounder and chief executive Sunil Kumar cautioned that gestation-heavy incentive schemes tend to favour already established large organisations. However, innovation often comes from smaller challengers, making it important for policy to be calibrated to company size, he argued.
MSME opportunities
Academia and skill-development experts expect the REPM scheme to catalyse new electronics manufacturing clusters, particularly for micro, small, and medium enterprises (MSMEs) and startups in advanced materials and magnet-based components.
T Senthil Siva Subramanian, who heads the Institute Industry Interface programme at Hindustan College of Science and Technology in Mathura, said the scheme can help create MSME-focused electronics clusters that bridge lab-to-market gaps, generate new job roles through skilling, and encourage startups in REPM and related applications.
He added that such clusters can feed into broader initiatives like “Vocal for Local” and “One District One Product” by nurturing “swadeshi” proof-of-concepts, while also advancing UN Sustainable Development Goals related to industry, innovation, infrastructure and climate action.
Strategic and innovation lens
Experts argue that domestic REPM capacity carries strategic weight beyond EVs, given its applications in defence, medical devices, nuclear research reactors and precision agriculture equipment.
Subramanian pointed out that magnets such as samarium-cobalt and neodymium-iron-boron are critical across defence security systems, electronic traction motors, therapeutic medical equipment, nuclear research reactors and electronic farm machinery, and that local design and production capabilities can enhance India’s strategic autonomy and global ranking in high-tech manufacturing.
He also expects the scheme to spur intangible investments in design tools, miniaturised products, software and intellectual property around rare earth magnets, boosting India’s standing in global innovation indices and helping domestic products progress across technology, customer, manufacturing and investment readiness levels.
For policymakers and industry, the REPM push is increasingly seen as a foundational layer that strengthens everything from chip packaging and compound semiconductors to EVs, robotics and flexible electronics.
(With inputs from Dia Rekhi in Chennai)