India: Govt floats tender to build rare earth magnet manufacturing capacity of 6,000 t/year

• INR 7,280 crore incentive scheme targets full value chain integration
• Incentives aim to reduce India’s dependence on China for critical minerals

India has invited global bids to establish integrated sintered neodymium iron boron (NdFeB) rare earth magnet manufacturing facilities — with a cumulative capacity of 6,000 tonnes per annum (t/year) — under an INR 7,280 crore incentive scheme, marking a strategic push to localise critical material supply chains. The tender, issued on 20 March 2026, follows a two-stage Least Cost System, with bid submissions closing on 28 May.

Incentive structure and capacity allocation

The scheme offers INR 750 crore in capital subsidy and INR 6,450 crore in sales-linked incentives, indicating a strong policy-backed capex push. Individual project capacities have been capped at 600-1,200 t/year to ensure distributed investment and faster execution. Limited neodymium-praseodymium (NdPr) oxide supply support through IREL (India) Ltd. is expected to mitigate upstream raw material risks for selected bidders, a key concern in rare earth processing.

Strategic push to reduce import dependence

India currently relies heavily on imports, particularly from China, for high-performance rare earth magnets used in electric vehicles (EVs), wind turbines, and electronics. By targeting end-to-end integration — from oxide refining to magnet production — the policy aims to strengthen domestic value addition and reduce exposure to supply disruptions.

Market participants indicate that assured incentives and raw material linkages could improve project viability, although concerns remain around technology transfer and long-term NdPr availability. “Execution will hinge on securing stable upstream supply and competitive processing costs,” a producer noted.

Outlook

In the near term, the tender is likely to attract global and domestic players, accelerating investments in downstream advanced materials. Over the medium term, successful implementation could position India as an alternative manufacturing hub, supporting decarbonisation-linked sectors while stabilising supply chains.