6 Stocks to Benefit as Govt Allocates ₹1,000 Cr for Rare Earth Magnet Production

India is preparing an incentive scheme to boost domestic rare earth magnet production, aiming to cut dependence on Chinese imports amid supply disruptions. In FY25, India imported over 53,000 tonnes of rare earth magnets, mostly from China. For FY26, Indian firms are targeting indigenous supply chains, with market growth projected at 5.1% CAGR.

The Ministry of Heavy Industries and the Department of Atomic Energy are set to finalise a Rs. 1,000 crore scheme within 10–15 days to boost domestic production of rare earth magnets. These magnets are crucial for electric vehicles, electronics, and defence. The initiative aims to reduce import dependence and strengthen India’s strategic manufacturing capabilities in high-tech sectors.

Moreover, India plans to boost domestic manufacturing of rare earth magnets with a target capacity of 1,500 tonnes. India Rare Earths Limited (IREL) will support this effort by supplying about 500 tonnes of rare earth raw materials to OEMs. This initiative aims to reduce import dependence and strengthen India’s position in critical technology supply chains.

Further, five to six companies have shown interest in entering India’s rare earth magnet manufacturing sector. While the government views the current supply situation as stable, it remains cautious about the growing preference among some firms to import fully assembled components, which could undermine efforts to build a robust domestic manufacturing ecosystem for critical technologies.

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Additionally, India holds the world’s third-largest rare earth reserves, yet less than 20% of its geological potential has been explored. Industry experts believe now is the opportune moment to fast-track exploration and build domestic capabilities.

Arun Misra, CEO of Hindustan Zinc and Executive Director at Vedanta, told CNBC-TV18 recently that while India is rich in monazite a key source of neodymium for rare earth magnets, the regulatory and technological hurdles are significant.

Here are the stocks that can likely benefit from the ₹1,000 crore scheme to encourage domestic production of rare earth magnets;

Written by Abhishek Singh

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