India has officially greenlit the ₹7,280-crore Rare Earth Magnets Scheme, but this approval represents far more than a policy decision — it marks the beginning of a new industrial strategy.
For the first time, India is attempting to build a full-stack magnet manufacturing ecosystem, from raw materials to finished permanent magnets, breaking free from China’s overwhelming dominance.
This time, the story isn’t just about “making magnets in India.”
It’s about reshaping supply chains, lowering industrial vulnerability, and creating pathways for MSMEs to enter sectors that were once out of reach.
related post: Rare Earth Magnets Manufacturing Scheme: What It Means for Indian MSMEs and Small Businesses
When the scheme was initially proposed earlier this year, India’s goal was import reduction.
Now, with China tightening export restrictions and global geopolitical tensions rising, the scheme has become a strategic necessity.
In other words:
Earlier → “We should make magnets in India.”
Now → “If we don’t produce them here, core industries will suffer.”
This shift in urgency creates new opportunities and new responsibilities, especially for small and medium enterprises.
Most people only saw the headline numbers. But the final approved version includes several subtle but important shifts compared to earlier drafts:
Instead of scattered production, the scheme pushes for 5 integrated facilities that will handle:
For MSMEs, this means large anchor factories will create clusters, increasing opportunities for vendors, suppliers, and services.
The approval document mentions explicit support for:
MSMEs in these sectors — even indirect suppliers — will see long-term stability in costs and sourcing.
The scheme will use a global competitive bidding model, meaning:
This opens doors for technology transfer that were not possible earlier.
Today, India assembles EVs, wind turbines, appliances, drones, and electronics — but imports key components.
With domestic magnet manufacturing, India moves a step closer to becoming a foundation-level manufacturer, not just a final assembler.
This is similar to what happened in:
Magnets could be the next such transformation.
Though large companies will make the magnets, MSMEs will supply:
These are high-margin MSME niche segments rarely discussed but extremely profitable.
Local magnets mean:
Startups and innovators can experiment more now because the cost barrier drops.
New REPM clusters will bring:
Expect states like Gujarat, Tamil Nadu, Karnataka, Odisha, and Andhra Pradesh to compete for magnet clusters.
Magnet factories demand:
MSME training institutes can seize this as a new market.
Instead of exporting low-value products, MSMEs can export:
This shifts India upward in the global value chain.
REPM components have extremely tight tolerances.
MSMEs must invest in:
China already makes money from recycling magnet scrap.
Indian MSMEs can build early advantage in:
Japan, Vietnam, and South Korea are rapidly expanding magnet capacity.
India must focus on:
to stay competitive.
The Rare Earth Magnets Scheme is not an isolated policy — it is part of a larger blueprint:
Rare earth magnets sit at the intersection of all these missions.
The approval of the Rare Earth Magnets Scheme marks a turning point.
India is moving away from depending on imported critical components and towards building high-tech capabilities at home.
For MSMEs and startups:
👉 The opportunities are new.
👉 The entry barriers are lower.
👉 The demand is long-term.
👉 And early movers will benefit the most.
This is more than a policy.
It is a once-in-a-decade industrial shift, and MSMEs have a chance to lead it — not follow it.
1. What sectors will benefit the most?
EVs, defence, wind energy, electronics, drones, motors, and automation.
2. Can small businesses directly apply for incentives?
They can collaborate with larger manufacturers or become certified suppliers.
3. Will magnet prices fall after domestic production starts?
Yes — local production will reduce import duties, freight costs, and delays.
4. Which MSMEs have the highest immediate opportunity?
Those in machining, heat treatment, coatings, testing, and lightweight motor manufacturing.
5. How soon will the scheme’s impact be visible?
Cluster development and bidding are expected to begin within months of approval.
Tabrez — Founder, BusinessZindagi.com
An entrepreneur writing real-world insights on MSME challenges, finance, exports, government schemes, and manufacturing opportunities.
Focused on simplifying complex policies so India’s small businesses can grow with clarity.
Reuters Report
https://www.reuters.com/world/india/india-approves-816-mln-rare-earth-permanent-magnets-manufacturing-programme-2025-11-26/
Financial Express
https://www.financialexpress.com/policy/economy-govt-clears-rs-7280-crore-scheme-to-boost-rare-earth-magnet-manufacturing-4056521/
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