In 2025, India announced a ₹60,000 crore ($7.28 billion) Production-Linked Incentive (PLI) scheme for critical minerals, with rare earth permanent magnets as a priority category. This is the largest single government commitment to non-Chinese rare earth magnet production outside of China. For US magnet buyers, it signals a meaningful shift in the global supply landscape.
What the PLI Scheme Covers
India's PLI for advanced chemistry cells and critical minerals includes incentives for domestic production of sintered NdFeB magnets, rare earth oxide separation, and metal alloy production. Qualifying manufacturers receive production-linked subsidies of 5–15% of incremental sales over a 5-year period, with additional benefits for capital investment in processing infrastructure.
Current State of Indian Magnet Production
India's existing rare earth magnet production is small — estimated at under 500 MT/year, primarily serving domestic defense and electronics markets. However, several factors make India a credible scaling candidate: significant domestic rare earth ore reserves (particularly monazite sands in Kerala and Tamil Nadu), an established chemicals processing industry, and strong engineering talent in materials science.
Timeline and Capacity Projections
Industry analysts project that PLI-backed Indian magnet production could reach 2,000–3,000 MT/year by 2028 and potentially 5,000+ MT/year by 2030. For context, global non-Chinese NdFeB production is currently around 15,000 MT/year. Indian capacity at scale would represent a 15–30% increase in non-Chinese supply — a significant addition to global availability.
Quality Considerations
The key question for US procurement teams is whether Indian-produced magnets will meet the quality standards required for motor, actuator, and sensor applications. Early indications are encouraging: several PLI applicants are partnering with established Japanese and European technology providers for sintering and quality control processes. However, qualifying a new supply source takes time — typically 6–12 months of testing and validation for precision motor applications.
Pricing Impact
Increased non-Chinese supply should put downward pressure on the premium currently charged for non-Chinese magnets (typically 15–30% above equivalent Chinese grades). However, this effect will take time to materialize. Don't expect immediate price reductions — new capacity needs to be built, qualified, and ramped before it affects market pricing.
What US Buyers Should Do Now
For SME manufacturers currently sourcing Chinese magnets and considering diversification, the Indian PLI scheme is a positive long-term signal. In the near term (2026–2027), the practical impact on your procurement will be limited. The actionable steps are:
**Start qualifying non-Chinese sources now.** Don't wait for Indian capacity to come online. Existing Tier 1 suppliers (Japan, EU) can meet current demand, and CORE Magnetics can provide access to these sources at SME volumes.
**Build provenance documentation into your procurement process.** Whether you ultimately source from Japan, India, Europe, or a combination, the compliance infrastructure you build now will serve you across all origins.
**Monitor Indian supplier qualifications.** As PLI-backed producers begin shipping qualification samples (expected late 2026), CORE will be evaluating and onboarding qualified Indian sources into our multi-tier provenance system.
The rare earth magnet supply chain is diversifying. India's PLI scheme accelerates a trend that was already underway. US SME manufacturers who position themselves now — with flexible, multi-source procurement strategies — will have the most options as new capacity comes online.