Note: Late on 25 June, after this article was published online, the government extended the bidding deadline for the rare-earth permanent magnets incentive scheme by a month to 29 July.
On 29 June, the Indian government will figure out if a serious player is indeed interested in building rare-earth permanent magnets in India. The ₹7,280-crore production-linked incentive (PLI) scheme that Prime Minister Narendra Modi’s cabinet approved last November was meant to be a turning point—India’s first real attempt to make the powerful little magnets that go into electric vehicles, wind turbines, fighter jets and defence systems. But as the clock winds down, few serious bids appear to have been made. The response can at best be termed lukewarm given the critical nature of the project.
Rare-earths are sometimes called the vitamins of modern industry, used in tiny amounts but impossible to substitute in the things that matter most. China has quietly dominated the entire chain for 30 years: mining, refining, converting to metal, making alloys and sintering into finished magnets. When Beijing restricted rare-earth exports last April, in the thick of its trade confrontation with Washington, it was not just responding to American tariffs. It was demonstrating leverage. America scrambled, Europe diversified, Japan accelerated.
In 12 months, rare-earth supply chains became one of the most fiercely contested fronts in global strategic competition. India, which sits on some of the world’s largest deposits, finds itself oddly central to all of this—rich in what everyone needs, but still unable to make what the world is fighting over.
Here is why:
Sands of resistance
Start with the embarrassing part. India’s coastal sands and inland regions hold an estimated 7.23 million tonnes of rare-earth oxides. Outside China, only Australia comes close. And yet, between 2022 and 2025, India bought between 84% and 90% of its rare-earth magnets from China.
India’s rare-earth deposits along its southern coastline have been the subject of decades of local resistance—coastal communities in Tamil Nadu, Kerala and Andhra Pradesh never wanted the beach sands mined, and coastal zone regulations have restricted access to the most mineral-rich areas. Rare-earth mining was a state monopoly until recently, run by IREL India Ltd, whose current production capacity is sufficient for only a third of the PLI’s 6,000-tonne target. Until Ashvini Magnets, a magnet maker, appeared last year, IREL exported its oxide to Japan because no Indian company could convert it to metal. Japan took India’s raw material, made the world’s best magnets, and sold them back to Indian customers.
The government has been working on the upstream picture. A National Critical Minerals Mission was set up in January 2025. Mining laws have been reformed to bring in private participation. Deals have been signed with mineral-rich nations from Australia and Argentina to Zambia and Côte d'Ivoire. India’s consumption of rare-earth permanent magnets is expected to double by 2030, driven by electric vehicles, wind energy, and defence. The PLI is the piece meant to convert all this upstream work into factory-floor reality.
When Beijing’s export curbs hit, the damage was immediate. Sona Comstar, the country’s largest auto component maker and the biggest importer of rare-earth magnets, found its supply lines suddenly choked. “We are the single largest affected party in the country,” said its chief executive officer (CEO) Vivek Vikram Singh. The company managed to stabilize by sourcing lower-grade alternatives, but the episode made one thing clear: 90% dependence on a single foreign source for a critical input is not a supply chain. It is a vulnerability.
The race
The PLI scheme, launched in 2020 across 14 sectors with an outlay of over ₹2 trillion, was India’s most ambitious attempt to replicate China’s manufacturing scale. The smartphone PLI has been a standout success: mobile phone production grew 146% in value between 2020-21 and 2024-25; exports grew 775%, and the government received revenue 19 times the incentives it paid out.
But that scheme had a natural tailwind. Global companies were already looking to move manufacturing out of China. Other PLIs have been uneven: a battery scheme produced mixed results, and in textiles and IT hardware, the government had to increase benefits and lower entry barriers to bring in adequate response. The rare-earth magnet PLI enjoys no comparable tailwind and faces a far thinner global equipment and technology supply chain.
Meanwhile, the rest of the world isn’t waiting. The US is pumping in $3.1 billion into domestic rare-earth supply chains. It has taken a government stake in USA Rare Earth while backing MP Materials to build a $1.25 billion magnet campus in Texas with Pentagon procurement guaranteed.
Japan’s Proterial is evaluating a plant in India to produce its NEOMAX magnets. Canada’s Neo Performance Magnets is exploring an independent entry. None of these are waiting for a tender to close.
India’s offer—a competitive bid, a two-year gestation window, no guaranteed buyers—is chasing the same thin pool of global partners they are all courting.
Repelled by the policy
The case for rare-earth magnets begins with the motor. A conventional electric motor uses copper windings with ferrite magnets to generate a magnetic field. Replace the magnet with a sintered NdFeB, a much stronger and lighter commercially available permanent magnet, copper use can fall by 80%.
At Mecwin Technologies, a Bengaluru-based company, Shiva Kumar H.M. has cut copper winding in a motor from 6kg to under a kilo, delivering a lighter, more efficient machine that gives EVs longer range and wind turbines more output.
Making that magnet requires four distinct stages: converting rare-earth oxide to metal; alloy preparation and powder production, where metal is melted, cast into micron-thin flakes and ground to a fine powder under inert gas; magnet fabrication and vacuum sintering at over 1,000 degrees Celsius; and testing and characterization.
Each stage requires precision machinery made almost exclusively by German and Japanese companies. For the most powerful grades—those used in defence and high-performance EV motors—the metal-making know-how for heavy rare-earths like dysprosium and terbium remains the closely guarded preserve of a handful of Japanese firms.
The PLI gives up to five companies the chance to build integrated plants totalling 6,000 tonnes a year, each between 600 and 1,200 tonnes. Winners get up to ₹2,150 per kg over five years plus a 15% capital subsidy. The financial bar—net worth of ₹180 crore for the smallest slot and ₹375 crore for the largest—has produced a troubling inversion: the most technically prepared players cannot get in while companies from unrelated industries are free to try.
Shiva Kumar is the clearest example. He worked on the floor of a Chinese magnet factory, consulted for DMRL, ran trial batches from 50 tonnes of IREL oxide, signed a formal agreement with Germany’s Fraunhofer Institute for Materials Recycling and Resource Strategies covering the full metal-to-magnet process, and arranged 2,000 tonnes of NdPr oxide (a rare-earth raw material) from African suppliers at 20% below IREL’s price. He independently solved the raw material sourcing problem every PLI winner will face. However, he is ₹125 crore short of the ₹180 crore net worth threshold for a 600 tonne plant.
When he went to buy a vacuum sintering furnace, the capital equipment used in the crucial final stages of magnet formation, a Japanese supplier quoted him ₹93 crore for machinery that normally costs ₹21 crore. “It (the PLI process) has created hype with equipment manufacturers who are mostly based out of Germany and Japan,” he said.
Vikram Dhoot of Pune-based Ashvini Magnets faces a different version of the same frustration. His company cracked oxide-to-metal conversion, the hardest and most environmentally demanding step in the chain, and was celebrated as a national achievement last year. The PLI requires winning bidders to do precisely this in-house, which in theory makes Dhoot’s work indispensable. In practice, he can only enter through a consortium with a winning bidder, sharing incentives based on each party’s contribution.
“Integrated projects spanning the entire value chain—from oxide to metal to magnet—are the most effective way to ensure transparency, fair value distribution and long-term competitiveness,” he said. But consortium terms are privately negotiated with no guaranteed outcome. “The PLI scheme is well structured and directionally very positive. However, capital remains a key constraint for small companies like us. What is needed now is a coordinated push—policy, capital and market access working together.”
On the other side of the gate stand companies that raise different questions altogether. Vivek Vikram Singh of Sona Comstar publicly called for the process to screen out frivolous applicants, a concern sharpened by the Rajesh Exports episode with the battery PLI.
Rajesh Exports, primarily a diamond trading firm, won the PLI to make lithium-ion batteries used in electric vehicles. Four years after, the company had nothing to show in terms of physical assets required to make batteries. Its tender is reportedly being reviewed now.
For the rare-earth magnet PLI, the government has appointed a technical evaluation committee headed by a joint secretary from the ministry of heavy industries, with members from the ministries of mines, renewable energy, NITI Aayog and the department of science and technology, to vet technical bids before financial bids are opened. The committee will scrutinize, among others, Midwest Advanced Materials of Hyderabad, a granite quarrying company whose 2024 Draft Red Herring Prospectus (DRHP) made no mention of magnet ambitions. Others in the fray include 20 Microns of Vadodara, a chemicals maker reportedly still looking for process know-how.
Sona Comstar’s Vikram says that they are interested in magnets manufacturing but are close to signing a deal with a technology partner who will be the lead bidder. “That way we can have a source for the magnets in place and not have to run the business,” he added.
Mint approached both Midwest Advanced Materials and 20 Microns for clarifications but didn't receive a response.
A senior IREL official, speaking without wanting to be named, said Midwest had imported Chinese magnet processing equipment last year. Deependra Singh, former managing director of IREL, is watchful. “The tender document allows companies to include machinery bought since April 2025, and hence, if Midwest bought equipment after April 2025 it stands to benefit,” he said. “But it remains to be seen if it bought new or used equipment, as the cost of second-hand machinery cannot be used to claim subsidy.”
The missing top
As of now, some of the companies best placed to pass technical scrutiny have not publicly emerged as bidders. The Tata Group, Larsen & Toubro (L&T), Reliance Industries Ltd (RIL) and JSW Group have all expressed interest but not submitted bids yet, though they could before the 29 June deadline. An RIL executive confirmed the company remains interested but acknowledged nothing has moved.
Vedanta appears to have moved quietly—group company Hindustan Zinc recently won a rare-earth mining block. NAN Magnetech Pvt. Ltd, a subsidiary of NAN GreenMet Pvt. Ltd, the holding company founded by Navin Agarwal, vice chairman of Vedanta, said it would participate in the PLI scheme.
“We have secured ready to execute land in Tirupati district, with a tailor-made financial incentive package from Andhra Pradesh. Our initial saleable capacity is 1,200 tonnes of high-performance NdFeB magnets, expanding up to 10,000 tonnes in phases. Investment in phase 1 is expected to be ₹1,250 crore,” Gaurav Shukla, deputy CEO at NAN MagneTech, told Mint in a written response.
Deependra Singh frames the hesitation structurally. Companies like Hitachi built their magnet businesses when they were small, and that specialized operation grew into a valued portfolio asset. For a group like Reliance or L&T today, a 1,200-tonne magnet plant is a rounding error in revenue but demands disproportionate senior management attention given the complexity of rare-earth supply chains and the exacting standards of defence and EV customers.
“Ideally, magnet making should be the preserve of smaller specialized companies or very large operations,” he said. “A PLI scheme targeting three players would have made better sense,” Singh said.
Sending 26 companies (in the pre-bid stage, 26 companies would be vying to find a technical partner) simultaneously into the market for technology and equipment has pushed up prices and stretched decision timelines further. “Global companies aren’t finding it easy to take a decision quickly,” he added.
Detailed questions sent to the ministry of heavy industries and the secretary of mines did not receive a response.
The lesson from penicillin
The biggest structural problem is built into the scheme itself. The PLI targets sintered NdFeB magnets but specifies no minimum grade, no performance standard, no coercivity requirement. The flat ₹2,150-per-kg incentive applies equally to a commodity magnet for an e-bicycle and a high-coercivity grade for a defence radar or a wind turbine. Lower-grade magnets are not on China’s restricted export list—they remain freely available as imports. If domestic production costs cannot compete on standard grades, either buyers keep importing or the government builds protective barriers, as it did with penicillin.
The penicillin PLI, initially notified in July 2020, created local producers, but pharmaceutical companies that use penicillin as a raw material now pay more for it than they would by importing. The same dynamic could raise input costs for automakers and small businesses that depend on standard-grade magnets.
India imported $212 million worth of magnets, including ferrite, in 2025-26, according to government trade data. The broader rare-earth magnets market is estimated at $2.5 billion in 2026 and projected to reach $4 billion by 2033. But these numbers need context. Most rare-earth magnets enter India embedded in finished equipment rather than as standalone imports, so true consumption is likely higher and harder to measure.
Deependra Singh estimates India’s demand at about 5% of global consumption; the US accounts for 20%. India’s market, while growing fast on the back of EV sales, is still nascent in absolute terms.
“On the one hand, Chinese imports may still be cheaper for lower grade magnets,” said Vivek Vikram Singh, “while the scheme may not achieve the real reason why it was set up for—self-sufficiency in high grade magnets.”
His overall verdict is measured. “The move by the government, though late, is a great start. But for the PLI scheme to be effective in the long run, there have to be incentives for domestic companies to innovate and secure long-term needs.”
Even if all five PLI winners commission plants on schedule—which the equipment squeeze, technology learning curve and raw material challenges make it highly unlikely before 2029—India will cover only a fraction of its domestic requirements.
- 7.23 million tonnes: India’s estimated reserves of rare-earth oxides along its coastal and inland regions—India sits on one of the largest deposits in the world.
- 84%-90%: The proportion of rare-earth magnets India imported directly from China between 2022 and 2025, underlying the country’s vulnerability.
- ₹7,280 crore: The financial outlay of the production-linked incentive scheme, for rare-earth permanent magnets, approved by the Cabinet.
- 6,000 tonnes: The annual production target of integrated sintered NdFeB magnets that the PLI scheme aims to establish across five winning companies.
- ₹180 crore: The minimum net-worth threshold required for a company to qualify for the smallest PLI manufacturing slot (a 600-tonne plant).