‘Working on it': India eyes rare earth magnet self-reliance; incentive scheme likely soon to counter China

Time of India

5 hours ago

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India is working to resolve the ongoing rare earth magnet supply crisis and reduce reliance on China by ramping up domestic production and offering incentives, heavy industries minister H D Kumaraswamy said on Tuesday.
'We are working on it,' Kumaraswamy told reporters, adding that Hyderabad-based Midwest has committed to producing 500 tonnes by the end of this year and scaling up to 5,000 tonnes next year, as per ET.
Rare earth magnets, crucial for electric vehicles, electronics and defence, have faced supply disruptions following China's export restrictions. In response, the government is planning a dedicated incentive scheme to subsidise magnet processing units in India, said officials quoted by ET.
These incentives, aimed at offsetting China's cost advantage, are expected to be finalised in 15–20 days.
Officials involved in the planning said the scheme may be sent to the Union Cabinet for approval if the subsidy outlay crosses Rs 1,000 crore. 'Stakeholder consultations are on,' secretary Kamran Rizvi said, adding that suggestions have ranged from 20 per cent to 50 per cent subsidy, and final decisions would follow a competitive bidding process.
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According to news agency PTI, Rizvi confirmed that Indian Rare Earths Ltd has reserves to support production of 1,500 tonnes of magnets, and noted that actual large-scale output will take around two years.
In the meantime, efforts are underway to source magnets and raw materials from countries like Japan and Vietnam.
Despite earlier concerns from automakers over restricted supply, government officials told ET that 'as of today, things look better' and no manufacturer has reported production halts.
To ease pressure, imports of fully assembled magnet components from China are being permitted under existing exemptions in auto and EV incentive schemes. A fortnight ago, 30 auto firms sought DGFT approval to import magnets from China to avoid disruptions.
Minister Kumaraswamy's remarks came shortly after National Security Advisor Ajit Doval met Chinese Foreign Minister Wang Yi in Beijing. A Chinese foreign ministry spokesperson said the two countries should be seen as 'partners rather than rivals.'
In a related development, Kumaraswamy and Mines Minister G Kishan Reddy chaired an inter-ministerial meeting earlier this month to align policies across key departments. 'This inter-ministerial effort will pave the way for India's self-reliance in strategic materials,' Kumaraswamy posted on X. Reddy added that under the National Critical Mineral Mission, the government is adopting a 'whole-of-government' approach to strengthen the rare earth value chain.
Officials pointed out that China currently controls over 90 per cent of the global rare earth magnet processing capacity, maintaining dominance by keeping magnet prices barely 5 per cent above the raw material cost.
'China wants to maintain its monopoly by keeping the price of magnets very low,' an Indian official cited by ET said, highlighting the need for subsidy-backed domestic alternatives.
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