Full Text
REGD. No. D. L.-33004/99
The Gazette of India
CG-DL-E-16122025-268535
EXTRAORDINARY
PART II-Section 3-Sub-section (ii)
PUBLISHED BY AUTHORITY
No. 5605]
NEW DELHI, MONDAY, DECEMBER 15, 2025/ AGRAHAYANA 24, 1947
MINISTRY OF HEAVY INDUSTRIES
NOTIFICATION
New Delhi, the 15th December, 2025
SCHEME TO PROMOTE MANUFACTURING OF SINTERED RARE EARTH PERMANENT MAGNET
S.O. 5800(E).—The Government has approved the Scheme to Promote Manufacturing of Sintered Rare
Earth Permanent Magnet (“the Scheme") with a budgetary outlay of ₹7,280 crore.
1. Background:
1.1 Rare Earth Permanent Magnets (REPMs) are one of the most powerful commercially available magnets made
from alloys that include rare earth elements, primarily Neodymium (Nd), Praseodymium (Pr) and Samarium
(Sm).
1.2 Within REPMs, sintered Neodymium-Iron-Boron (NdFeB) REPMs are one of the strongest and most widely
used magnets which are manufactured from rare earth oxides (REOs) viz. NdPr oxide. These REPMs offer high
magnetic strength, excellent performance-to-weight ratio and good resistance to demagnetization.
1.3 The production of sintered NdFeB REPMs from Rare Earth Ores involves a large number of steps, starting with
upstream processes involving mining of rare earth (RE) ores to refining them into high-purity rare earth oxides
(REOs). This is followed by midstream processes involving conversion of REOs to metals, metals to alloys, and
alloys to magnet.
1.4 These sintered NdFeB REPMs are used in several essential downstream sectors such as electric vehicles,
renewable energy, electronics, defence & aerospace, etc. Pictorial representation of process involved in
production of sintered NdFeB REPM is provided in Figure 1 below.
Figure 2: Process involved in production of sintered NdFeB REPM from Rare Earth Ores
1.5 India has one of the world's largest rare earth reserves mostly located in coastal regions. IREL (India) Ltd., a
CPSE under the Department of Atomic Energy (DAE) is the only company in India that is engaged in the
mining of rare earth ores and refining these into REOs. At present, its NdPr Oxide production capacity is 400
MTPA which can support the production of approximately 1,200 MTPA of sintered NdFeB REPM. Further,
IREL has a stock of NdPr Oxide of ~500 MT. Thus, IREL, at present, is in a position to support manufacturing
of around 1,500 MTPA of REPM.
1.6 While India possesses upstream capabilities in mining, separation and oxide refining, there is a notable gap in
the industrial-scale midstream capabilities needed for oxide-to-metal, metal-to-alloy and alloy-to-magnet
conversion. Due to this, India currently imports all its sintered NdFeB REPM demand for downstream
applications.
1.7 Therefore, building a complete domestic REPM value chain of converting rare earth oxide into sintered NdFeB
REPM is essential for India's strategic and industrial advancement. Through this Scheme, the Government of
India intends to incentivize setting up of 6,000 MTPA of integrated REO to sintered NdFeB REPM's
manufacturing facilities in the country.
2. Salient features of the Scheme:
2.1 Indigenously produced sintered NdFeB REPMs from NdPr oxide shall be eligible for sales-linked incentives and
capital subsidy under the Scheme.
2.2 The Scheme will allocate up to 6,000 MTPA of integrated sintered NdFeB magnet manufacturing capacity to
five (5) applicants (hereinafter called the “Beneficiary(ies)”) through a transparent bidding process viz. Global
Tender Enquiry (GTE), by issuing a Request for Proposal (RFP). Minimum allocation to a Beneficiary will be
600 MTPA going up to a maximum allocation of 1,200 MTPA, in multiples of 100 MTPA.
2.3 The Beneficiaries will receive (a) sales-linked incentive on sale of sintered NdFeB REPM; and (b) capital
subsidy for setting up the allocated manufacturing capacity.
2.4 Further, three selected Beneficiaries with the lowest bids would receive an assured limited supply of NdPr oxide
from IREL (India) Ltd., a CPSE under the Department of Atomic Energy (DAE).
2.5 The total duration of the Scheme will be 7 years, which includes 2 years of gestation period for setting up the
manufacturing facilities and 5 years for incentive disbursement on sale of sintered NdFeB REPM.
2.6 Further, in case the first sale of sintered NdFeB REPM commences prior to the completion of the gestation
period, then this additional period will also be eligible for sales-linked incentive over and above the 5 year
duration.
3. Selection of Beneficiaries
3.1 Eligibility:
i. An Applicant for the purpose of the Scheme should be a company, international entity, or a group of
companies and/or international entities ("Consortium"). In case of a consortium, one of the members
must be identified as a “Lead Partner”. The Lead Partner shall have a shareholding of not less than
51% in the Beneficiary.
ii. The selected applicants will be designated as the "Beneficiary". In case the consortium and/or foreign
entity(ies) are allocated capacity under the Scheme, they would be required to form an SPV under the
Companies Act, 2013 which will also be designated as the "Beneficiary".
iii. Net worth requirement: The Applicant/ Lead Partner must have a minimum net worth as follows:
Table 1 – Minimum net worth requirement
+---------------------+-----------------------------+
| Bid capacity (МТРА) | Minimum net worth (₹ crore) |
+---------------------+-----------------------------+
| 600 | 180 |
| 700/800 | 245 |
| 900/1,000 | 310 |
| 1,100/1,200 | 375 |
+---------------------+-----------------------------+
iv. Detailed eligibility criteria will be specified in the RFP.
3.2 The allocation of capacity and incentive to Beneficiaries shall be carried out through a transparent Least Cost
System (LCS) which shall comprise a "two-envelope" system, i.e., technical bid and financial bid.
3.3 In the technical bid, the Applicants may bid for capacity from 600 MTPA up to a maximum of 1,200 MTPA, in
multiples of 100 MTPA (the "Project"). Accordingly, the applicant shall submit a Detailed Project Report
(DPR) which will include their committed capacity and capability to undertake the Project. Contents of the DPR
will be specified in the RFP. A Technical Committee (TC) will evaluate the technical bid of the Applicants.
3.4 The financial bid of only the technically qualified Applicants shall be opened. In the financial bid, Applicant
will quote the amount of incentive sought (per kg of sintered NdFeB magnet sold), capped at ₹ 2,150 per
kilogram. This incentive sought shall be agnostic to the source of NdPr oxide i.e. this incentive amount will be
applicable to sintered NdFeB magnets produced from NdPr oxide sourced from IREL or under own
arrangement.
3.5 Five responsive technically qualified bids with the lowest incentive sought will be selected (L1, L2, L3, L4, and
L5). After conclusion of the bidding process, a Letter of Intent (LoI) will be issued to the selected applicants.
3.6 Submission of Performance Bank Guarantee: The selected applicants/ Beneficiaries shall submit a Performance
Bank Guarantee (PBG) at the following rates to confirm their selection under the Scheme:
Table 2 – Performance Bank Guarantee required as per allocated capacity
+--------------------------+-------------------------------------+
| Allocated capacity (MTPA)| Performance Bank Guarantee (₹ crore)|
+--------------------------+-------------------------------------+
| 600 | 20 |
| 700/800/900 | 30 |
| 1,000/1,100/1,200 | 40 |
+--------------------------+-------------------------------------+
3.7 Issuance of Letter of Award (LoA): Post completion of formalities spelt out in the LoI, submission of PBG,
formation of SPV (if required), etc., a Letter of Award (LoA) will be issued to the Beneficiary.
4. Incentive to the Beneficiaries
4.1 The Scheme envisages two kinds of support viz. sales-linked incentive and capital subsidy, whose details are as
follows:
4.2 Sales-linked incentive:
i. The Beneficiaries shall be eligible to receive sales-linked incentive on sale of sintered NdFeB REPM
from the date of first sales invoice till the terminal date of the Scheme. Incentives shall be disbursed to
the Beneficiaries on a half-yearly/annual basis.
ii. The amount of sales-linked incentive payable to each Beneficiary would be calculated as follows:
Amount of incentive (sales-linked incentive) = Quantity of sintered NdFeB REPM sold (in kg) during
the period × (multiplied by) quoted incentive (₹/kg)
iii. The sales-linked incentive disbursed to the Beneficiary shall be capped at 40% of the net sales turnover
(net of GST) of the sintered NdFeB REPM.
iv. The Beneficiary shall be eligible to receive sales-linked incentive only after commissioning of the
allocated capacity.
v. During the Scheme tenure, the total sales-linked incentive to a Beneficiary shall not exceed the
following amounts:
Table 3 - Capping on sales linked incentive during the Scheme tenure
+--------------------------+------------------------------+
| Allocated capacity (MTPA)| Cap on sales-linked incentive |
| | (₹ crore) |
+--------------------------+------------------------------+
| 600 | 645 |
| 700 | 753 |
| 800 | 860 |
| 900 | 968 |
| 1,000 | 1,075 |
| 1,100 | 1,183 |
| 1,200 | 1,290 |
+--------------------------+------------------------------+
4.3 Capital subsidy
i. A capital subsidy of 15% on eligible investment made after 1st April 2025 shall be provided to the
Beneficiaries as reimbursement upon the commissioning of the entire allocated capacity.
ii. The total capital subsidy to a Beneficiary shall be capped as follows:
Table 4 – Capping of capital subsidy per Beneficiary under the Scheme
+--------------------------+---------------------------------+
| Allocated capacity (MTPA)| Cap on capital subsidy (₹ crore)|
+--------------------------+---------------------------------+
| 600 | 75 |
| 700 or 800 | 100 |
| 900 or 1,000 | 120 |
| 1,100 or 1,200 | 150 |
+--------------------------+---------------------------------+
iii. Eligible investment for this purpose shall include expenditure incurred on:
a. Plant, Machinery, Equipment and Associated Utilities: This shall include expenditure on plant,
machinery, equipment and associated utilities as well as tools, dies, moulds, jigs, fixtures (including
parts, accessories, components and spares thereof) of the same, used in the engineering research &
development (ER&D) and product design and development, manufacturing, assembly, testing,
packaging or processing of the eligible product under the Scheme (sintered NdFeB REPM). It shall
also include expenditure on packaging, freight/transport, insurance, and erection and commissioning
of the plant, machinery, equipment, and associated utilities. Associated utilities would include
captive power and effluent treatment plants, essential equipment required in operations area such as
clean rooms, air curtains, temperature and air quality control systems, compressed air, water and
power supply, and control systems. Associated utilities would also include IT and ITES
infrastructure related to manufacturing including servers, software, and ERP solutions. All non-
creditable taxes and duties would also be included in such expenditure.
b. Expenditure incurred on Research and Development (R&D): This shall include capital expenditure
on R&D and product development related to sintered NdFeB REPM. The term “related” shall refer
to all stages in the entire value chain for manufacturing of sintered NdFeB REPM. Such expenditure
shall include expenditure on in-house and captive R&D, including all stages in the entire value chain
of manufacturing of sintered NdFeB REPM. Such expenditure shall include test and measuring
instruments, prototypes used for testing, purchase of design tools, software cost (directly used for
R&D) and license fee, expenditure on technology, IPR, Patents and Copyrights for R&D. All non-
creditable taxes and duties would be included in such expenditure.
с. Expenditure related to Transfer of Technology (ToT) Agreements: This shall include cost of
technology and initial technology purchase related to manufacturing of sintered NdFeB REPM. All
non-creditable taxes and duties would be included in such expenditure.
Second-hand/used/ refurbished plant, machinery, equipment, utilities or Research & Development
equipment or assets shall not be allowed under the Scheme. Further, above mentioned assets acquired
through slump sale or leased assets shall also not be permitted under the Scheme.
4.4 Raw material supply
i. IREL (India) Ltd. will allocate a total of 500 MTPA of NdPr oxide to the L1, L2, and L3 Beneficiaries.
The allocation will be as follows: 200 MTPA to L1, 167 MTPA to L2, and 133 MTPA to L3
Beneficiaries – which will be sufficient for around 1,500 MTPA of sintered NdFeB magnet production.
ii. For the remaining sintered NdFeB REPM production capacity, the Beneficiaries will arrange for NdPr
oxide under their own arrangement(s). For example, if the L1 Beneficiary is awarded a capacity of 1,200
MTPA of sintered NdFeB REPM, then IREL allocated NdPr oxide (200 MTPA) will support production
of around 600 MTPA of sintered NdFeB REPM. The balance requirement of 200 MTPA of NdPr oxide
shall be arranged by the L1 Beneficiary through its own sources. Further, the L4 and L5 Beneficiaries
shall have to arrange for the entire NdPr oxide requirement from their own sources.
5. Disbursement Mechanism
5.1 Sales-linked Incentive: To avail sales linked incentive, the Beneficiaries shall submit statutory auditor
certificate, management certificate, audited sales invoices, e-way bills, GST reconciliation, etc. for sale of
sintered NdFeB magnets on a half yearly/annual basis. The same shall be used to calculate the incentive payable
to the Beneficiary.
5.2 Capital Subsidy: In order to avail capital subsidy, the Beneficiaries shall submit-
i. A certificate both from concerned Department of Industries and Chartered Engineer certifying the
commissioning of entire allocated capacity of sintered NdFeB magnets from NdPr oxide, including all
intermediate processes therein.
ii. A certificate from Statutory Auditor certifying the commencement of sale and capitalization of the
assets in books.
5.3 MHI may seek additional data, clarification, or documents, as deemed appropriate, for examining and
processing of incentive/ subsidy claim. Further, MHI may appoint an Independent Engineer (IE) to verify claims
made by Beneficiaries.
6. Scheme milestones
6.1 The Beneficiary must achieve the following milestones under the Scheme:
i. Milestone 1: Achieve eligible investment of ₹150 crore within one year from the date of issuance of
LoA.
ii. Milestone 2: Achieve eligible investment within two years from the date of issuance of LoA as indicated
in the following table:
Table 5 - Minimum expenditure required for Milestone 2
+--------------------------+-----------------------------------------+
| Allocated capacity (МТРА)| Minimum expenditure required towards eligible |
| | investment |
| | (₹ crore) |
+--------------------------+-----------------------------------------+
| 600 | 300 |
| 700/800/900 | 450 |
| 1,000/1,100/1,200 | 600 |
+--------------------------+-----------------------------------------+
iii. Milestone 3: Commissioning of 50% of the allocated capacity within three years from the date of
issuance of LoA.
7. Scheme outlay
7.1 The total financial outlay of the Scheme will be ₹7,280 crore. The indicative breakup of total outlay over the
tenure of the Scheme is tabulated below:
Table 6 - Indicative breakup of total outlay over the tenure of the Scheme
+------------------------+-----------------+-----------------------+
| Indicative year-wise, component wise fund allocation (₹ crore) |
+------------------------+-----------------+-----------------------+
| Year | Capital subsidy | Sales linked incentive|
+------------------------+-----------------+-----------------------+
| Year 1 | Gestation period| |
| Year 2 | | |
| Year 3 | 750 | 1,290 |
| Year 4 | - | 1,290 |
| Year 5 | - | 1,290 |
| Year 6 | - | 1,290 |
| Year 7 | - | 1,290 |
| Sub-total | 750 | 6,450 |
+------------------------+-----------------+-----------------------+
| Total incentive/ subsidy | 7,200 |
| Admin expenses* | 80 |
| GRAND TOTAL | 7,280 |
+------------------------+-----------------+-----------------------+
*Admin expenses include PMA fees, fees for knowledge partners and technical expertise.
8. Scheme Monitoring Committee (SMC)
8.1 An inter-ministerial Scheme Monitoring Committee chaired by Secretary, MHI will be constituted for overall
monitoring and implementation of the Scheme as well as to remove any obstacles/ difficulties that may arise in
the implementation stage. The SMC will conduct a periodic review of the performance of the Scheme. The
composition of the SMC is provided at Annexure-A.
9. Technical Committee (TC)
9.1 A Technical Committee (TC) will be constituted to provide inputs on preparation of bidding documents and
evaluation of the bids. The TC will also conduct a quarterly review of the performance of the Scheme. The
composition of the TC is provided at Annexure-B.
10. Project Management Agency (PMA)
10.1 The Scheme shall be implemented through a PMA, which shall be responsible for providing secretarial,
managerial and implementation support and carrying out other responsibilities, as assigned by MHI from time to
time. PMA would inter-alia be responsible for:
i. Development & maintenance of online portal for the Scheme.
ii. Preparation and issuance of standard operating procedure (SOP) for processing of incentive claims.
iii. Assisting the SMC and TC in administrative tasks such as documentation, meeting coordination and
preparation of technical briefs.
iv. Ensuring smooth execution of the Scheme, addressing challenges faced by applicants and ensuring proper
utilization of resources.
v. Examining the claims for disbursement of sales-linked incentives and capital subsidy.
vi. Hiring of techno-financial and legal consultants for finalizing the bid documents and providing support till
the issuance of Letter of Award.
vii. Hiring of Independent Engineer (IE).
viii. Conducting a detailed analysis of each project's status in terms of technical, financial, and operational
aspects.
ix. Preparing and submitting reports summarizing the overall progress of the Scheme to MHI.
x. Provide recommendations to strengthen forward and backward linkages for Beneficiaries during Scheme
implementation.
xi. Prepare quarterly review reports (QRRs) which will include progress reports from Beneficiaries on the
following KPIs, including but not limited to:
a) Project Phases and Milestones
b) Infrastructure Development
c) Technology Integration
d) Human Resources
e) Risk Management
11. Misrepresentation/ Breach of commitments
11.1 In case of any misrepresentation or failure to meet milestones or any other obligations as specified in the RFP by
the Beneficiary, suitable penalty provisions including, but not limited to, encashment of the Performance Bank
Guarantee (PBG), revocation of the Letter of Award, and the forfeiture of the entire incentive package will be
applicable.
11.2 If MHI is satisfied that eligibility under the Scheme and/ or benefits availed under the Scheme have been
obtained by misrepresentation of facts or falsification of information, MHI will ask the Beneficiary to refund
any benefit obtained under the Scheme along with interest calculated at 3 years' SBI Marginal cost of funds-
based lending rate (MCLR) prevailing on the dates of availing benefits, compounded annually, after giving an
opportunity to the Beneficiary of being heard. This will be in addition to MHI's right to take any other action as
deemed fit.
12. Resolution of Disputes
Any dispute under this Scheme shall be resolved by mutual discussion and reconciliation. In case of difference
of opinion, decision of Additional Secretary/ Joint Secretary, MHI shall be final. The jurisdiction in respect of
any disputes that may arise under this Scheme shall lie at the Courts/Tribunals in New Delhi, India only.
13. Power to modify the Scheme
The Empowered Group of Secretaries (EGOS) chaired by Cabinet Secretary shall be fully empowered to make
any changes/ modifications/ amendments required in the Scheme parameters for its smooth implementation,
within the overall Scheme outlay of ₹ 7,280 crore.
[F. No. 12(06)/2024-PE-XI/CPSE-1]
VIJAY MITTAL, Jt. Secy.
Annexure-A
Composition of Scheme Monitoring Committee (SMC) will be as follows:
+---------+--------------------------------------------------------------+------------------+
| Sr. No. | Particulars | Designation |
+---------+--------------------------------------------------------------+------------------+
| 1. | Secretary, Heavy Industries | Chairman |
| 2. | Representative, O/o PSA | Member |
| 3. | Representative, NSCS | Member |
| 4. | CEO, NITI Aayog | Member |
| 5. | Secretary, DoE | Member |
| 6. | Secretary, DEA | Member |
| 7. | Secretary, Department of Atomic Energy | Member |
| 8. | Secretary, Mines | Member |
| 9. | Secretary, Department of Science & Technology | Member |
| 10. | Secretary, MNRE | Member |
| 11. | Secretary, DPIIT | Member |
| 12. | Secretary, MeitY | Member |
| 13. | Secretary, Department of Defence Research & Development and | Member |
| | Chairman, DRDO | |
| 14. | Financial Advisor, Heavy Industries | Member |
| 15. | Joint Secretary, Heavy Industries | Member Secretary |
+---------+--------------------------------------------------------------+------------------+
Annexure-B
Composition of the Technical Committee (TC) shall be as follows:
+---------+--------------------------------------------------------------+------------------+
| Sr. No. | Particulars | Designation |
+---------+--------------------------------------------------------------+------------------+
| 1. | Joint Secretary, Heavy Industries | Chairman |
| 2. | Representative, PSA | Member |
| 3. | Representative, NSCS | Member |
| 4. | Representative, NITI Aayog | Member |
| 5. | Joint Secretary, Department of Atomic Energy | Member |
| 6. | Joint Secretary, Mines | Member |
| 7. | Joint Secretary, MNRE | Member |
| 8. | Joint Secretary, Department of Science & Technology | Member |
| 9. | Chief Controller of Accounts (CCA), MHI | Member |
| 10. | PMA | Member Secretary |
+---------+--------------------------------------------------------------+------------------+
This committee can also co-opt technical experts from IREL, DMRL, BARC, NFTDC, BHEL, industry experts,
academia, etc.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.
GORAKHA NATH Digitally signed by GORAKHA NATH YADAVA
YADAVA Date: 2025.12.16 14:12:08 +05'30'