New rare earth policy aims to cut 43-44% cost gap in NdFeB magnets: IREL

Union Cabinet has approved ₹7,280 crore incentive scheme To promote domestic manufacturing of rare-earth permanent magnets. Sarada Bhushan Mohanty, director (finance), Indian Rare Earths Limited (IREL), said the scheme mainly focuses on manufacturing neodymium-iron-boron (NdFeB) magnets used in sectors such as defence, electronics and electric mobility. He pointed out that the industry has long faced a “price disability of 43-44%” which has restricted investment.

Of the total outlay, ₹6,450 crore has been earmarked as sales-linked incentives over five years and ₹750 crore as capital subsidy. “The intention of the scheme is to invite private players to come and invest in the sector,” Mohanty said.

The government plans to support five manufacturers producing 600 to 1,200 tonnes annually. Bidders will compete based on their required level of subsidy, with approximately ₹1,290 crore available every year as incentives.

On IREL’s potential role, Mohanty said, “The situation is completely open.” The company could partner with private companies, set up facilities using acquired technology, or focus on providing a key raw material – neodymium-praseodymium (NdPR) oxide. He clarified that the support is only for finished magnets, which requires a complete local supply chain from oxide to metal and magnet.

Read also , Rare earth PLI scheme can bridge India’s midstream gap, but two-year timeline is tough: EY’s Saurabh Agarwal

One challenge is access to heavy rare earth elements such as dysprosium and terbium, which are essential for high-performance magnets. India consists mostly of light rare earths, but exploration is underway in Gujarat Mineral Development Corporation (GMDC) and Rajasthan. Mohanty expects it will take “three to four years” for these materials to be available, aiming for self-sufficiency by 2030. Meanwhile, technology from Germany or Japan can be used which requires minimal heavy rare earths.

Representing private industry, Subhrakant Panda, managing director of Indian Metals and Ferro Alloys Ltd (IMFA), called the initiative “very, very important”. He linked the occasion to national programs like Make in India and efforts towards net zero. He said that rare earth processing is a “different cup of tea” from IMFA’s existing business, but confirmed that the company is evaluating the partnership.

Panda said commercial decisions will need to align with national priorities, particularly in securing raw materials and technology for reliable supply chains.

Commenting on funding options, Mohanty said that while IREL is currently a “strategic entity” and exempt from listing, “options are open”, no formal proposal has been made to the government yet.

For the full interview, watch the accompanying video

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