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Time of India
3 days ago
- Business
- Time of India
Rare earth supply risk: Indian electronics firms worried as Chinese curbs may hit; but can Beijing also afford this?
This is an AI-generated image, used for representational purposes only. A number of applicants under India's Electronics Component Manufacturing Scheme (ECMS) have flagged concerns over meeting their first-year production targets due to ongoing shortages of rare earth minerals. According to ET, at least 10 companies have raised the issue with the ministry of electronics and information technology (MeitY), warning that if the shortage continues for another six months, they may not be able to meet the incentive-linked thresholds. The rare earth scarcity stems from export restrictions imposed by China, which controls more than 90% of global rare earth processing. China introduced special licensing requirements for seven rare earth elements and associated magnets from April 4 this year, leading to supply disruptions across key industries. These include electronics, automobiles, and clean energy technologies. "Companies have expressed concern, but within the sector, it isn't an alarming outcry," an official aware of the matter was quoted as saying by ET. 'If there is a component that uses rare earth, instead of importing that rare earth and making that component in India, they will simply import that component.' While firms are exploring alternatives, such as sourcing from different suppliers or shifting to rare-earth-free technologies, the timing has been challenging, particularly for those scaling up manufacturing for exports. 'The ECMS has been unveiled at a time when many entities want to scale up and take advantage of exports,' said Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA), as quoted by ET. He added that supply shocks in rare earth magnets have hit the sector hard. The Rs 22,919 crore ECMS, launched in May, seeks to build a robust domestic ecosystem for electronic components like multi-layer PCBs, lithium-ion cells, resistors, capacitors, display and camera modules. PCBs have attracted particular attention from applicants, according to KS Babu, secretary of the Indian Printed Circuit Association (IPCA), who noted that the scheme addresses both multi-layer and high-density interconnect boards. However, he also pointed out that local production of key inputs like copper-clad laminates is still missing. 'Chinese suppliers are now taking advantage by squeezing prices, citing problems with shipments,' Babu said, as per ET. The scheme, effective from FY26 through FY32, includes a one-year gestation period. However, manufacturers, particularly MSMEs, have sought quicker access to incentives to recover their investments. A Delhi-based PCB maker was cited by ET saying that the government has informally assured leniency during the verification and claims process. Responding to industry requests, MeitY will extend the ECMS application window beyond July 31, as confirmed by officials. Many small firms are still finalising their sourcing channels, joint ventures, and tech partnerships. In a written reply to the Rajya Sabha, minister of state for commerce and industry Jitin Prasada noted that the export restrictions on rare earth magnets have led to supply chain bottlenecks for auto and electronics sectors. However, the ministry has not received specific reports of cost escalation or project delays from industry hubs in Maharashtra, as per news agency PTI. Despite the disruption, industry leaders remain hopeful. 'China also can't afford to continue an export ban for long, since their companies will begin bleeding and it will place a long term strain on their relations with many countries,' Chandak said, as per ET. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Economic Times
4 days ago
- Business
- Economic Times
Rare earth shortage hits electronic component companies
Agencies Uncertainty over rare earth mineral supply has led some applicants under the Electronics Component Manufacturing Scheme (ECMS) to warn the government that they may miss incentive-linked targets for the first year, if shortages persist for another six applications under the scheme have surged past 110 now, at least 10 firms have sounded out worries at a time when the industry is keen on expanding its production and export footprint, officials at the Ministry of Electronics and Information Technology (MeitY), and industry executives told ET. For certain components, some firms plan to import, rather than make them locally, a person aware of the development said. "Companies have expressed concern, but within the sector, it isn't an alarming outcry. If there is a component that uses rare earth, instead of importing that rare earth and making that component in India, they will simply import that component," the person said. "There are other options like alternate sources of supply, or alternate technologies that don't use rare earths." The timing of the mineral scarcity due to curbs placed by China has been a challenge. "The ECMS has been unveiled at a time when many entities want to scale up and take advantage of exports," said Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA). "Beyond the traditional industry base, many Indian companies are diversifying into component manufacturing. But the industry has been particularly impacted by the supply shocks in rare earth magnets," he ₹22,919 crore scheme aims to create a strong domestic manufacturing ecosystem for a range of components that are fundamental building blocks in nearly all modern electronic devices. These include bare components such as Multi-layer Printed Circuit Board (PCB) and Li-ion cells for digital applications, passive components like resistors, capacitors, and inductors, as well as display and camera module was opened for applications in May, a month after China imposed strict export controls and licensing requirements for rare earths, of which it controls over 90% of the global processing capacity and the largest reserves. PCBs in focus Officials said PCBs have found key interest from applicants. "The scheme has seen strong interest from the PCB industry since this is the first time we have gotten some mileage. It addresses not only multi-layer, but also high-density interconnect boards. But given what is going on right now (globally), it is very difficult to hit the targets. The government has promised all support," said KS Babu, secretary, Indian Printed Circuit Association (IPCA).He also highlighted that the scheme does not address the complete absence of local production of essential raw materials like copper clad laminates, which are currently imported entirely from China. "Chinese suppliers are now taking advantage by squeezing prices, citing problems with shipments," Babu said. Set to be implemented over six years from FY26 through FY32, the scheme has a one-year gestation period for FY26 in case of turnover-linked incentives. "It's only natural that MSMEs who are arranging these large sums for investment want to receive it as soon as possible. Informally, the government has assured it will be lenient during final verification and claim approval once ECMS starts by making the process to claim incentives," said a top Delhi-based PCB Centre will be extending the application window for the scheme beyond the initial three-month period, which is set to end on 31 July, MeitY sources confirmed on Thursday. The decision was taken after industry bodies had asked for the same. "Many of the smaller companies who are interested, have to establish channels for sourcing materials, set up joint ventures, and secure technology," Babu said. Industry insiders are also hopeful of a resolution in the coming months. "China also can't afford to continue an export ban for long, since their companies will begin bleeding and it will place a long term strain on their relations with many countries," Chandak stressed. Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Can Chyawanprash save Dabur in the age of Shark-Tank startups? Piaggio sues former employee for 'Coldplay' reference on CEO Why Air India could loom large on its biggest rival IndiGo's Q1 results Can medicines inject the vitamins Amazon is missing? How India's oil arbitrage has hit the European sanctions wall Stock Radar: Bajaj Finance breaks out from falling supply trendline; likely to hit fresh highs above Rs 1,000 Weekly Top Picks: These stocks scored 10 on 10 on Stock Reports Plus These large- and mid-cap stocks can give more than 25% return in 1 year, according to analysts For investors with patience & cash: 6 large-caps with strong balance sheets & big TAM; and an upside potential of more than 24%
Time of India
4 days ago
- Business
- Time of India
Rare earth shortage hits electronic component companies
Academy Empower your mind, elevate your skills Uncertainty over rare earth mineral supply has led some applicants under the Electronics Component Manufacturing Scheme ECMS ) to warn the government that they may miss incentive-linked targets for the first year, if shortages persist for another six applications under the scheme have surged past 110 now, at least 10 firms have sounded out worries at a time when the industry is keen on expanding its production and export footprint, officials at the Ministry of Electronics and Information Technology (MeitY), and industry executives told certain components, some firms plan to import, rather than make them locally, a person aware of the development said."Companies have expressed concern, but within the sector, it isn't an alarming outcry. If there is a component that uses rare earth, instead of importing that rare earth and making that component in India, they will simply import that component," the person said."There are other options like alternate sources of supply, or alternate technologies that don't use rare earths." The timing of the mineral scarcity due to curbs placed by China has been a challenge."The ECMS has been unveiled at a time when many entities want to scale up and take advantage of exports," said Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA)."Beyond the traditional industry base, many Indian companies are diversifying into component manufacturing. But the industry has been particularly impacted by the supply shocks in rare earth magnets," he ₹22,919 crore scheme aims to create a strong domestic manufacturing ecosystem for a range of components that are fundamental building blocks in nearly all modern electronic devices. These include bare components such as Multi-layer Printed Circuit Board (PCB) and Li-ion cells for digital applications, passive components like resistors, capacitors, and inductors, as well as display and camera module was opened for applications in May, a month after China imposed strict export controls and licensing requirements for rare earths, of which it controls over 90% of the global processing capacity and the largest said PCBs have found key interest from applicants. "The scheme has seen strong interest from the PCB industry since this is the first time we have gotten some mileage. It addresses not only multi-layer, but also high-density interconnect boards. But given what is going on right now (globally), it is very difficult to hit the targets. The government has promised all support," said KS Babu, secretary, Indian Printed Circuit Association (IPCA).He also highlighted that the scheme does not address the complete absence of local production of essential raw materials like copper clad laminates, which are currently imported entirely from China. "Chinese suppliers are now taking advantage by squeezing prices, citing problems with shipments," Babu to be implemented over six years from FY26 through FY32, the scheme has a one-year gestation period for FY26 in case of turnover-linked incentives."It's only natural that MSMEs who are arranging these large sums for investment want to receive it as soon as possible. Informally, the government has assured it will be lenient during final verification and claim approval once ECMS starts by making the process to claim incentives," said a top Delhi-based PCB Centre will be extending the application window for the scheme beyond the initial three-month period, which is set to end on 31 July, MeitY sources confirmed on Thursday. The decision was taken after industry bodies had asked for the same. "Many of the smaller companies who are interested, have to establish channels for sourcing materials, set up joint ventures, and secure technology," Babu insiders are also hopeful of a resolution in the coming months. "China also can't afford to continue an export ban for long, since their companies will begin bleeding and it will place a long term strain on their relations with many countries," Chandak stressed.
