India is set to take a major step towards strengthening its strategic manufacturing capabilities as the government announced that the country will commence rare-earth permanent magnet production within this year. The announcement was made on Thursday, February 19, 2026, by Union Minister for Mines G. Kishan Reddy, marking a significant milestone in India’s journey toward self-reliance in critical mineral technologies.

Rare-earth permanent magnets are a vital component in several high-growth sectors including electric vehicles, renewable energy, electronics, aerospace and defence. With global supply chains facing uncertainties and heavy concentration of rare-earth magnet production in a few countries, India’s decision to begin domestic manufacturing is being seen as a strategic and economic necessity.

The announcement also included the government’s plan to establish dedicated critical mineral processing parks in Odisha, Andhra Pradesh, Maharashtra and Gujarat. These parks are expected to create an integrated ecosystem for mineral extraction, processing, value addition and advanced manufacturing.

This development comes months after the Union Cabinet approved a scheme in November 2025 to promote rare-earth permanent magnet manufacturing in India. The scheme aims for an annual production capacity of 6,000 metric tons and carries a financial outlay of ₹7,280 crore.

Why Rare-Earth Permanent Magnets Matter

Rare-earth permanent magnets, especially neodymium-iron-boron magnets, are among the strongest types of magnets available today. Their high magnetic strength and durability make them indispensable in modern technology.

In electric vehicles, these magnets are used in traction motors that power the vehicle. Their efficiency helps improve battery performance and vehicle range. As India pushes for greater EV adoption under various government initiatives, ensuring a domestic supply of such magnets becomes critical.

In the renewable energy sector, particularly wind energy, rare-earth magnets are used in wind turbine generators. Permanent magnet-based generators are more efficient and require less maintenance compared to conventional systems. With India targeting significant expansion in renewable energy capacity, access to these magnets is essential.

The electronics sector also relies heavily on rare-earth magnets. Smartphones, hard disk drives, audio systems, sensors and numerous other consumer devices use these magnets. In defence and aerospace applications, they are used in advanced radar systems, missile guidance systems and aircraft components.

Given their wide range of applications, rare-earth magnets are considered critical materials globally. Many countries are now investing in building secure supply chains for these materials to avoid disruptions.

Reducing Import Dependence

Currently, global production of rare-earth permanent magnets is heavily concentrated in China, which controls a significant share of mining, processing and magnet manufacturing. This concentration creates vulnerabilities in the global supply chain.

India, despite having rare-earth reserves, has largely depended on imports for high-performance permanent magnets. The new production initiative aims to change this scenario.

By starting domestic production, India hopes to:

• Reduce reliance on imports

• Improve supply chain resilience

• Support domestic industries

• Strengthen strategic autonomy

The move aligns with broader government initiatives such as Make in India and Atmanirbhar Bharat, which focus on boosting domestic manufacturing and reducing external dependencies.

Cabinet-Approved Scheme Details

The scheme approved by the Union Cabinet in November 2025 sets clear targets and financial support mechanisms. The planned annual production capacity of 6,000 metric tons is significant, considering India is entering this segment at a large scale.

The financial outlay of ₹7,280 crore will likely support:

• Capital investment for manufacturing facilities

• Research and development

• Technology acquisition

• Infrastructure development

• Skill development and training

This structured approach indicates that the government is not only aiming for basic production but also for building a competitive ecosystem capable of meeting global standards.

Critical Mineral Processing Parks

Another important aspect of the announcement is the plan to establish dedicated critical mineral processing parks in four states:

• Odisha

• Andhra Pradesh

• Maharashtra

• Gujarat

These states have been selected due to their industrial base, port connectivity, mineral resources and existing infrastructure.

The proposed parks are expected to provide:

• Integrated mineral processing facilities

• Logistics support

• Testing and quality certification labs

• Common infrastructure for manufacturers

• Environmental management systems

Such cluster-based development can reduce operational costs and attract private investment. It can also encourage collaboration between mining companies, manufacturers, research institutions and startups.

Strategic and Economic Impact

The production of rare-earth permanent magnets is not just an industrial move; it is a strategic decision with far-reaching implications.

Boost to Electric Vehicle Sector

India’s EV market is growing rapidly. Government policies, incentives and rising consumer awareness are accelerating adoption. However, the availability of critical components such as magnets directly affects manufacturing costs.

Domestic magnet production can:

• Lower input costs over time

• Ensure steady supply

• Reduce currency outflow due to imports

• Encourage local EV manufacturing

This could make EVs more affordable and support India’s climate goals.

Strengthening Renewable Energy Expansion

India has ambitious targets for renewable energy capacity. Wind energy projects, especially large-scale installations, require high-performance magnets.

Local production ensures that renewable energy developers are not dependent on external markets for essential components. This can help speed up project timelines and reduce delays caused by supply chain issues.

Defence and National Security

Rare-earth magnets are crucial in advanced defence systems. Import dependency in such sensitive areas can pose risks.

By developing domestic capabilities, India strengthens its defence manufacturing ecosystem. This supports the broader push toward indigenisation of defence equipment.

Job Creation and Industrial Growth

The establishment of magnet manufacturing facilities and processing parks is expected to create employment opportunities across the value chain.

From mining and refining to manufacturing and logistics, multiple sectors will benefit. Additionally, the growth of ancillary industries such as tooling, equipment manufacturing and maintenance services can further boost economic activity.

Global Context

The global race for critical minerals has intensified in recent years. Countries such as the United States, Japan, Australia and members of the European Union are investing heavily in securing rare-earth supply chains.

India’s entry into large-scale magnet production positions it as an emerging player in this global landscape. If executed effectively, India could not only meet domestic demand but also explore export opportunities in the long term.

However, achieving global competitiveness will require:

• Advanced technology

• High purity processing capabilities

• Strong environmental safeguards

• Efficient regulatory frameworks

Environmental Considerations

Rare-earth mining and processing can have environmental impacts if not managed properly. Waste disposal, chemical usage and land disturbance are important concerns.

The proposed processing parks offer an opportunity to implement modern environmental standards from the beginning. Centralised facilities can ensure better monitoring, waste treatment and compliance.

Balancing industrial growth with environmental sustainability will be key to the long-term success of this initiative.

Challenges Ahead

While the announcement is promising, certain challenges must be addressed:

1. Technology acquisition: Rare-earth magnet manufacturing requires advanced technology and expertise.

2. Skilled workforce: Training specialised personnel is essential.

3. Global competition: Competing with established players may require price competitiveness and innovation.

4. Infrastructure readiness: Timely development of processing parks and manufacturing facilities is critical.

Overcoming these challenges will require coordinated efforts between the government, private sector and research institutions.

A Step Towards Technological Sovereignty

The move to produce rare-earth permanent magnets domestically reflects a broader shift in India’s industrial policy. Critical technologies are now being viewed not just as economic assets but as pillars of national security and global competitiveness.

As sectors such as artificial intelligence, robotics, electric mobility and clean energy expand, the demand for high-performance materials will continue to grow. Ensuring reliable access to these materials is essential.

India’s decision to commence production within 2026 sends a strong signal about its long-term vision. It demonstrates recognition of global trends and proactive planning.

Conclusion

India’s plan to begin rare-earth permanent magnet production and establish critical mineral processing parks represents a landmark development in the country’s industrial journey.

With a production target of 6,000 metric tons annually and a financial outlay of ₹7,280 crore, the initiative is ambitious and strategic. It aims to reduce import dependence, strengthen key industries, support clean energy transition and enhance national security.

If implemented effectively, this move could transform India’s position in the global critical minerals ecosystem and create long-term economic and strategic benefits.

The coming months will be crucial as production facilities are set up and the groundwork for processing parks begins. The success of this initiative could shape the future of India’s electric vehicle, renewable energy and advanced manufacturing sectors for decades to come.

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