Coal India Targets Rare Earth Magnet Manufacturing Without Sops

Rare earth magnet manufacturing is gaining momentum in India as Coal India has sought zero production-linked incentives under the Centre's scheme for establishing domestic rare earth permanent magnet facilities.

The state-owned coal producer is among the bidders seeking to manufacture sintered neodymium-iron-boron (NdFeB) magnets, which are essential for electric vehicles, wind turbines, electronics and defense equipment.

Hyderabad-based IRP Infratech, in consortium with US-based BaRupOn, has also submitted a zero-incentive bid.

Their bids come as the Ministry of Heavy Industries advances its Rs 7,280 crore program to establish 6,000 metric tons of annual domestic manufacturing capacity.

Why are Coal India and IRP seeking zero production incentives?

The Ministry of Heavy Industries has opened financial bids under the rare earth permanent magnet manufacturing scheme.

Coal India and the IRP Infratech–BaRupOn consortium have sought nil per-kilogram production incentives, unlike other bidders.

The reported incentive requirements include:

• Coal India: Nil.
• IRP-BaRupOn: Nil
• Prozeal Green Energy: Rs 243/kg
• ReNew Power: Rs 449/kg
• Midwest Energy: Rs 505.05/kg

The difference in bids highlights varying incentive requirements among prospective manufacturers.

Midwest Energy has indicated a 1,200-ton-per-annum capacity commitment alongside its incentive bid. The company said its existing 500 TPA Phase-I facility was under commissioning, with expansion to 1,200 TPA planned by August 2027.

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What does India's Rs 7,280 crore magnet manufacturing scheme offer?

Approved by the Union Cabinet in November 2025, the scheme aims to establish integrated rare earth permanent magnet manufacturing facilities with a combined capacity of 6,000 MTPA.

Its financial structure includes:

• Rs 6,450 crore sales-linked incentives distributed over five years.
• Rs 750 crore capital subsidies for establishing manufacturing facilities.
• 6,000 MTPA targeted domestic manufacturing capacity.
• Five beneficiaries to be selected through global competitive bidding, with each eligible for 600–1,200 MTPA.

The Ministry of Heavy Industries received 20 bids in August 2026, of which 16 qualified after technical evaluation.

Which industries could benefit from domestic magnet production?

The expansion of rare earth magnet manufacturing could strengthen supply availability for several industrial sectors.

Key applications include:

• Automotive: Electric vehicle motors and other high-performance components.
• Renewable energy: Permanent magnet generators used in wind turbines.
• Electronics: Motors, sensors and specialized electronic equipment.
• Defense and aerospace: Precision systems, actuators and advanced equipment.

The government expects India's rare earth permanent magnet consumption to double by 2030 from its 2025 level.

For Coal India, the financial bid marks its participation in a manufacturing segment beyond its conventional coal operations.

The eventual allocation of capacity, facility commissioning and access to raw materials will determine how effectively the proposed investments translate into domestic magnet production.