The union government is expected to decide on a subsidy scheme to promote domestic production of rare earth magnets, a critical component for electric vehicles (EVs).
This move is vital to strengthening the supply chain and attracting investments, especially after the government opened applications for its EV incentive scheme on Tuesday.
Union minister for heavy industries, H.D. Kumaraswamy, on Tuesday said that a Hyderabad-based company has committed to delivering 500 tonnes of rare earth magnets by December. Discussions are also ongoing with the mines ministry, and the final decision on the subsidy scheme is imminent.
Heavy industries ministry secretary Kamran Rizvi said stakeholder consultations are underway to determine the level of subsidy, with industry demands ranging from 20 per cent to 50 per cent. If the incentive amount remains below ₹1,000 crore, it can be cleared by the ministers of heavy industries and finance. If it exceeds that, cabinet approval will be required.
China’s restrictions on rare earth magnet exports have disrupted global supply chains, prompting India to seek alternative sources, such as Japan and Vietnam, while building on its domestic capabilities. Production of rare earth magnets within India could take up to two years.
The subsidy scheme, expected to be announced within 15-20 days, would help companies set up processing units to convert rare earth oxides into magnets.
Tata Motors said it is exploring alternate sourcing options but does not foresee immediate supply issues.
Hindustan Copper plans to bid for critical minerals and rare earth element blocks along with other PSUs like Indian Oil Corporation Ltd ,GAIL (India) and RITES as part of its diversification strategy.