India is set to take a significant step towards strengthening its position in the global critical minerals value chain. Union Minister for Mines G. Kishan Reddy announced that India will commence production of rare earth permanent magnets within this year, marking a major milestone in the country’s industrial and strategic capabilities.

The announcement, made on Thursday, February 19, 2026, signals the government’s strong commitment to reducing import dependence and building a self-reliant ecosystem for high-technology manufacturing sectors such as electric vehicles (EVs), renewable energy, electronics, aerospace, and defence.

Alongside this, the Minister also revealed the government’s plans to establish dedicated parks for critical mineral processing plants in Odisha, Andhra Pradesh, Maharashtra, and Gujarat. These developments are expected to significantly boost India’s manufacturing strength and strategic autonomy.

Importance of Rare Earth Permanent Magnets

Rare earth permanent magnets are among the strongest types of magnets available globally. They are primarily made using rare earth elements such as neodymium, praseodymium, dysprosium, and terbium. These materials provide superior magnetic strength and durability compared to conventional magnets.

These magnets are crucial components in several high-technology industries:

• Electric Vehicles (EVs) – Used in traction motors for higher efficiency and compact design.

• Renewable Energy – Essential for wind turbine generators.

• Electronics – Used in speakers, hard drives, and various precision instruments.

• Aerospace and Defence – Integral to advanced guidance systems, radar equipment, and aircraft systems.

Given their widespread usage, rare earth magnets are considered a strategic resource globally.

Cabinet Approval and Financial Outlay

The Union Cabinet had approved a scheme for rare earth permanent magnet manufacturing in November 2025. The scheme envisages a production capacity of 6,000 metric tons per annum.

The total financial outlay for the scheme stands at ₹7,280 crore, reflecting the government’s strong push towards building domestic capabilities in critical mineral processing and magnet manufacturing.

This move aligns with India’s broader policy objectives under Atmanirbhar Bharat, focusing on reducing dependency on imports, particularly from countries that dominate rare earth supply chains.

Strategic Need for Domestic Production

Currently, a significant portion of global rare earth magnet supply is concentrated in a few countries. This concentration creates supply chain risks and geopolitical vulnerabilities.

India, despite having rare earth reserves, has historically relied heavily on imports for finished rare earth magnets. The new manufacturing initiative aims to address this gap by establishing an integrated ecosystem for mining, processing, and manufacturing.

By starting domestic production, India aims to:

• Enhance supply chain security

• Support domestic EV and renewable industries

• Strengthen defence manufacturing

• Promote technology transfer and innovation

Dedicated Critical Mineral Processing Parks

In addition to magnet production, the government plans to set up dedicated parks for critical mineral processing in four key states:

• Odisha

• Andhra Pradesh

• Maharashtra

• Gujarat

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

The parks will focus on:

• Processing of rare earth elements

• Value addition to critical minerals

• Supporting downstream manufacturing units

• Encouraging private sector participation

Such clusters are expected to create economies of scale and improve operational efficiency.

Boost to Electric Vehicle Industry

India’s EV sector is rapidly expanding, driven by policy support and rising consumer demand. Rare earth permanent magnets are critical for high-performance EV motors.

Domestic production will reduce dependence on imports and help control costs, thereby making EVs more affordable.

It will also support the government’s goal of increasing EV penetration in the country, contributing to lower carbon emissions and cleaner transportation.

Support for Renewable Energy Expansion

India has ambitious renewable energy targets, including large-scale wind and solar power installations.

Wind turbines, in particular, require strong permanent magnets for efficient energy generation. Domestic magnet production will ensure uninterrupted supply for renewable energy projects.

This step strengthens India’s energy transition strategy and supports long-term sustainability goals.

Strengthening Defence and Aerospace

Rare earth magnets play a crucial role in advanced defence systems, including missile guidance, communication systems, and radar technologies.

By establishing domestic manufacturing, India enhances its defence preparedness and reduces vulnerability to global supply disruptions.

This move aligns with the government’s broader push for indigenisation in defence manufacturing.

Economic and Employment Impact

The ₹7,280 crore investment is expected to generate significant employment opportunities across mining, processing, manufacturing, and research sectors.

The establishment of critical mineral parks will attract investments from private players and global companies seeking to diversify supply chains.

Local communities in the selected states are likely to benefit from industrial development and job creation.

Challenges Ahead

While the announcement is promising, several challenges remain:

• Ensuring environmental compliance in mining operations

• Developing advanced processing technologies

• Competing with established global suppliers

• Building skilled manpower

The success of the initiative will depend on effective coordination between central and state governments, industry stakeholders, and research institutions.

Global Context

Globally, countries are racing to secure critical mineral supply chains due to growing demand from clean energy and technology sectors.

India’s move to begin rare earth permanent magnet production positions it strategically in this global landscape.

By developing domestic capacity, India can potentially become a significant exporter in the long term.

Long-Term Vision

The government’s strategy reflects a long-term vision of building an integrated ecosystem from mineral extraction to high-end manufacturing.

The rare earth magnet scheme is not just an industrial policy decision but a strategic move aimed at strengthening India’s economic resilience.

It also signals to global investors that India is serious about becoming a hub for advanced manufacturing.

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