Securing Critical Inputs for the EV Revolution
On November 26, 2025, India’s Union Cabinet approved a ₹7,280 crore Rare Earth Permanent Magnet (REPM) scheme aimed at establishing an integrated domestic ecosystem for sintered magnets. The initiative targets 6,000 tonnes per annum (TPA) capacity across five plants over the next 2–3 years, covering the full value chain from rare earth oxide refining to magnet production. The scheme, with ₹6,450 crore in sales-linked incentives and ₹750 crore in capital subsidies, aims to eliminate import dependence by 2030—an urgency underscored by China’s April 2025 export restrictions on seven rare earths, which disrupted over 35 Indian EV and auto suppliers.
Critical Role of REPMs in EVs
Sintered rare earth magnets, particularly neodymium-iron-boron (NdFeB), are central to EV traction motors, enabling high-efficiency, compact designs that directly influence range and performance. India currently imports nearly 100% of its 4,010 TPA demand, projected to double to 8,220 TPA by 2030. Chinese dominance—90% of global production and 70% of processing—has historically exposed Indian EV makers like Tata Motors and Ola Electric to supply shocks and cost volatility. Domestic REPM capacity promises stable pricing, secure supply chains, and reduced geopolitical vulnerability, offering potential savings of 15–20% per motor through subsidies and localized production.
Impact on EV Exports and Competitiveness
The scheme could dramatically boost India’s EV exports, which currently hover around 5,000 units annually, mostly two-wheelers. With domestic NdFeB production ramping to 6,000 TPA, India can scale exports to 50,000+ units by 2028, targeting $2–3 billion in revenue, with Southeast Asia, Africa, and Europe as primary markets. Subsidized magnet costs ($40–50/kg) combined with FAME-III incentives enhance price competitiveness, allowing vehicles like the Tiago EV (~$10,000) to undercut Chinese rivals by 10–15%.
Beyond cost, REPM autonomy strengthens supply security, raising delivery reliability to over 95%, crucial for just-in-time exports. Downstream integration—from motor manufacturing to battery packs—can enhance margins by 5–7%, attracting foreign investment from firms like LG and Samsung. Compliance with EU Battery Regulation via traceable, domestic magnets also provides a certification edge in tariff-free markets.
Persistent Challenges
Despite these gains, hurdles remain. Domestic lithium-ion cell production is underutilized (10%), lithium refining lags, and battery pack costs remain 20% higher than China. Imported machinery and skill shortages could delay plant ramp-ups by 6–12 months, while global dumping pressures and competitor FTAs, such as Vietnam’s RCEP advantage, may cap market share unless trade strategies evolve.
Transforming Vulnerability into Opportunity
India’s REPM initiative is not merely a manufacturing scheme—it is a strategic lever to transform the country from an assembly hub into a global EV player. By reducing dependency on Chinese imports, stabilizing costs, and enabling export-ready EVs, the program can lift India’s EV export CAGR to 40% by 2030, capturing 5% of the sub-$15,000 global market. Success depends on rapid execution, synchronized ecosystem development, and complementary policies in batteries and infrastructure, turning supply vulnerabilities into a $10 billion export engine and strengthening India’s position in the global electric mobility race.
(With agency inputs)
