Renault Group India CEO Stephane Deblaise on Wednesday said the union cabinet’s approval to Rs 7,280 crore scheme to facilitate manufacturing of rare earth permanent magnet will come as fillip for the auto OEMs and component manufacturers.

“The government’s decision of investing Rs 7280 crore for India’s first integrated Rare Earth Permanent Magnet manufacturing scheme is a pivotal step in strengthening the nation’s self-reliance aspirations. This initiative reflects India’s strategic intent to strengthen its rare-earth refining capabilities and accelerate high-value manufacturing,” said Deblaise.  

“For the automobile sector, localizing rare earth magnets will boost growth for both auto OEMs and component manufacturers, support clean energy powertrains, reduce import dependence, deepen the domestic value chain, and enhance long-term competitiveness,” he added.  

“We welcome this vision and look forward to contributing to a robust, future-ready mobility landscape that supports India’s sustainable growth and its ambition to become a global automotive hub,” he said.

The scheme approved by the government envisages setting up of five manufacturing units of 1200 MTPA capacity each. Production is likely to begin in the next two to three years. "This first-of-its-kind initiative aims to establish 6,000 Metric Tons per Annum (MTPA) of integrated Rare Earth Permanent Magnet (REPM) manufacturing in India, thereby enhancing self-reliance and positioning India as a key player in the global REPM market," the government said in a statement. 

"The total financial outlay of the scheme is Rs 7,280 crore, comprising a sales-linked incentives of Rs 6,450 crore on REPM sales for five years and capital subsidy of Rs.750 crore for setting up an aggregate of 6,000 MTPA of REPM manufacturing facilities," it added. 

“The scheme envisions allocating the total capacity to five beneficiaries through a global competitive bidding process and each beneficiary will be allotted up to 1,200 MTPA of capacity,” it said. 

“REPMs are one of the strongest types of permanent magnets and are vital for electric vehicles, renewable energy, electronics, aerospace, and defence applications,” the statement said. 

“The Scheme will support the creation of integrated REPM manufacturing facilities, involving conversion of rare earth oxides to metals, metals to alloys, and alloys to finished REPMs,” it added. 

“At present, India's demand for REPMs is met primarily through imports. With this initiative, India will establish its first ever integrated REPM manufacturing facilities, generating employment, strengthening self-reliance and advancing the nation's commitment to achieve Net Zero by 2070,” it added.