India is taking a bold step toward self-reliance in critical technologies with the new ₹7,280-crore Scheme to Promote Sintered Rare Earth Permanent Magnet (rare earth magnets) Manufacturing. While the announcement sounds highly technical, its impact will go far beyond big industries — it could open game-changing opportunities for India’s MSMEs and small businesses.
You may also like to read: Rare Earth Magnets Scheme Approved: A Transformative Shift for India’s High-Tech Supply Chain & MSMEs
Rare earth permanent magnets (REPMs) are small but powerful components used in:
Currently, China controls more than 90% of the world’s rare earth magnet supply chain (CSIS). India imports almost all its requirements (Moneycontrol), making small and medium manufacturers vulnerable to price hikes, delays, or outright export bans.
With China imposing new export restrictions in 2025, India realized the urgent need to build its own ecosystem (SPF China Observer).
Each magnet facility will need suppliers for alloys, coatings, precision machining, testing equipment, logistics, and waste recycling. MSMEs in engineering and specialized components can plug into these supply chains.
Thousands of MSMEs in electronics, EV parts, motors, and appliances currently import magnets. Domestic production means lower costs, faster delivery, and more reliable supply.
Global demand is rising. MSMEs with quality certification can export niche magnet-based products — small EV motors, drone components, precision devices — to markets in Europe, Japan, and the US.
Startups in EVs, robotics, renewable energy, and IoT devices will benefit as local magnets reduce R&D and production costs.
The scheme will create demand for skilled technicians and testing labs. MSMEs in training, certification, and services can expand their role.
China’s dominance in rare earth magnets exposed India’s vulnerability. In FY24, India imported ~460 tonnes of magnets — nearly all from China (Moneycontrol).
When China restricted exports in 2025 (Economic Times), MSMEs suffered the most because they lack buffers to handle supply shocks.
This scheme acts as insurance for MSMEs, ensuring resilience and continuity.
The scheme supports the Atmanirbhar Bharat vision. By building local capacity, India can:
The Rare Earth Magnet Manufacturing Scheme may appear designed for large industries, but MSMEs and small businesses will be critical to its success. From supply chains to exports, from startups to skilling services, MSMEs stand to gain enormously.
China’s ban has become a wake-up call. With this scheme, India can turn crisis into opportunity — empowering small businesses to play a big role in the country’s self-reliant future.
Tabrez — Founder, BusinessZindagi.com
Is 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/
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