Wider stakeholder consultation underway before finalising rare earth magnet scheme

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

Centre has widened stakeholder consultations to finalise contours of a tailor-made scheme subsidising rare earth magnet manufacturers, one that would not mirror any existing programme like the production-linked incentive plan, a senior government official told Moneycontrol.

This scheme, currently under inter-ministerial discussion, will take time before reaching the Cabinet for approval, the official said.

Minister for Heavy Industry and Steel HD Kumaraswamy on July 11 had said the Centre has drafted a scheme to offer subsidies worth Rs 1,345 crore to makers of rare earth magnets in India. The proposed scheme is expected to cover both private and public sector enterprises, offering incentives to set up domestic capacity across the value chain.

According to the official cited above, the idea of the scheme is to nudge more entities into locally manufacturing and processing rare earth magnets.

“Consultations are ongoing, when it comes to stakeholders we are discussing with those who make magnets, people who process magnets, people who use the raw material. This won’t be like a PLI scheme, the contours will be different,” the official added.

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

Beijing had put restrictions on seven of 17 rare earth elements, including powerful magnets used in high-tech manufacturing from electric vehicles to smartphones and fighter jets.

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Apart from the proposed scheme, India is also looking to source critical minerals from Peru and Chile, as part of proposed trade deals with them.

Critical minerals such as lithium, nickel and graphite are considered vital for high-end technology products including electric vehicles (EVs), drones, and battery storage. China has been a dominant player in the critical minerals supply chain globally.