Rare Earth Magnet Scheme To Offer INR 7,300 Cr Incentives

The expenditure finance committee of the finance ministry has reportedly approved INR 7,300 Cr ($822.3 Mn) incentive scheme aimed at catalysing domestic manufacturing of rare earth magnets.

The scheme will now be sent to the Union cabinet for approval. It will earmark INR 6,500 Cr for capital expenditure and INR 800 Cr for operational expenditure, offering substantial support for companies setting up end-to-end rare earth magnet processing units and supply chains across the country, ET reported.

“It is expected that India’s rare earth magnet production will reach 6,000 tonnes by 2030 through these incentives,” an official was quoted as saying, adding that this would be enough to meet domestic requirements.

Notably, the heavy industries ministry proposed INR 1,345 Cr scheme to incentivise local magnet production in July, under which it was to support selected manufacturers with “end-to-end” backing to convert rare earth oxides into magnets.

A report by Financial Express said that the incentives under the scheme, set to run for 7 years, were then increased to INR 5,000 Cr and further to INR 7,300 Cr to strengthen the domestic base in this critical manufacturing segment.

Notably, in April this year, China banned the export of seven critical rare earth elements — samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium – used in EVs, electronics and defence products, and more.

The move impacted many sectors in the country, including the rapidly growing EV industry. Last month, Ather Energy said it had to temporarily deviate from the manufacturing guidelines prescribed under the PM E-DRIVE scheme and the Phased Manufacturing Program (PMP) due to the ban on exports of certain categories of heavy rare earth magnets by China.

Nevertheless, the supply has improved over the past month, as per industry players. The recent improvement in relations between India and China has also raised hopes of a breakthrough on the issue.

Meanwhile, a separate report by ET said that China is reportedly seeking guarantees from India that heavy rare earth magnets supplied by it will not be re-exported to the US and will be used only to meet local needs.

Indian companies have submitted end-user certificates, highlighting that magnets will not be used for manufacturing any weapons of mass destruction, it added.

The post Rare Earth Magnet Scheme To Offer INR 7,300 Cr Incentives appeared first on Inc42 Media.