India launched a ₹7,280-crore incentive programme, with a request for proposal (RFP), for bidders to build five rare-earth magnet plants to secure its critical mineral supply chain. The scheme aims to build local capacity for a crucial component used in sectors such as defence, electronics, renewable energy, and automobiles.
Prospective applicants can submit their bids to establish integrated sintered neodymium-iron-boron (NdFeB) magnet manufacturing facilities in India and can be eligible for availing capital subsidy as well as sales-linked incentives under the government’s rare earth permanent magnet (REPM) scheme, the ministry said in a statement.
The scheme provides a capital subsidy of ₹750 crore for setting up five processing units and a sales-linked incentive of ₹6,450 crore for all beneficiaries upon commencement of production.
The scheme received the Cabinet’s assent on 26 November, and official guidelines were notified on 15 December.
The raw material required—rare earth oxides—will be supplied to the three lowest bidders by the only rare earth miner in the country, state-run India Rare Earths Ltd (Irel).
The seven-year scheme targets an annual capacity of 6,000 tonnes, providing two years for construction followed by five years of sales-linked incentives.
Global drivers and bidding process
The scheme was created in response to the global supply chain disruption caused by China's halt to exports of rare-earth magnets in April last year, amid an intense tariff war between Beijing and Washington, DC.
China accounts for about 60% of the world's rare earth mining and 90% of processing capacity.
Despite its mining and refining strengths, India lacks midstream capacity to produce rare-earth magnets, leaving manufacturers entirely dependent on imports.
A pre-bid meeting will be held on 7 April in New Delhi, following which interested parties can bid for magnet-making capacity in the range of 600-1,200 tonnes, according to the global tender floated by the scheme's project management agency, Industrial Finance Corporation of India (IFCI).
Technical bids will be opened on 29 May. Bidders will have to pay ₹4.5 lakh as the tender fee and ₹1 crore as earnest money deposit.
Each bidder must submit a technical bid that includes a detailed project report (DPR) and a financial bid that specifies the incentive sought and the price at which it will sell the magnets. This will be the selling price regardless of whether the oxides are sourced from IREL or elsewhere.
All bidders must also submit a performance bank guarantee of ₹20-40 crore, based on the capacity they will develop, as per the scheme guidelines.
The government has also said beneficiaries must invest ₹300-600 crore in two years, depending on the capacity they have been allocated.
The sales incentive will be calculated as the kilograms of magnets sold multiplied by the bidder’s quoted incentive (price per kilo) in its financial bid, capped at ₹2,150 per kg. The sales-linked incentive will be capped at 40% of the net sales turnover of these magnets.
According to the scheme guidelines notified in December, the government has also capped sales-linked sops at a proportionate level to the manufacturing capacity allotted.