HD Kumaraswamy says Rs 1,345-crore incentive scheme to make rare earth magnets in India soon

Subsidy scheme worth Rs 1,345 crore for manufacturing rare earth magnets in the works: HD Kumaraswamy

The Indian government has drafted a scheme proposal to offer subsidies worth Rs 1,345 crore to manufacturers of rare earth magnets in the country, Union minister for heavy industry and steel HD Kumaraswamy said on July 11.

"A scheme has been circulated for Rs 1,345 crore subsidy for manufacturers of rare earth magnets. It is currently under inter-ministerial consultation. It is proposed that there will be two manufacturers as of now, however this could change by the time the scheme is ready," said Kumaraswamy.

Kamran Rizvi, secretary, Ministry of Heavy Industry, said those manufacturers will be eligible for the subsidy who do end-to-end processing from rare earth oxides to magnets. The proposed scheme is expected to cover both private companies and public sector enterprises, offering incentives to set up domestic capacity across the value chain.

The move comes after China, the world’s dominant supplier, imposed export restrictions in April this year on seven rare earth elements and finished magnets. Under the revised rules, Chinese exporters must secure licences and submit end-use declarations confirming materials won’t be used in defence or re-exported to the US.

Rare earth magnets are used in the manufacturing of permanent magnet synchronous motors (PMSMs), which are employed by EVs. Even hybrid models depend on them for efficient propulsion. In ICE cars, their use is mostly limited to electric power steering and other motorised systems.