Government to decide subsidy scheme for rare earth magnet production in 15-20 days: Kumaraswamy

New Delhi: Union Steel and Heavy Industries Minister H D Kumaraswamy on Tuesday said that to address rare earth magnet shortages, India is exploring sourcing from Australia, Brazil, Japan or Vietnam, apart from boosting local production through a subsidy scheme to the industry in the next 15-20 days.

Kumaraswamy told reporters that, "One Hyderabad-based company has promised that they will deliver 500 tonnes by this year-end, December. We have (had) discussions with the Mines Minister. Our Secretary and our ministry are working on, ultimately, a decision will be taken within 15-20 days."

The Chinese government decision in April this year to restrict exports of key metals caused widespread disruption in the manufacturing of automobiles and semiconductor chips in many of countries, including India.

Rare earth magnets include neodymium-iron-boron (NdFeB). It is used for high-performance automotive applications such as traction motors in electric vehicles (two-wheelers and passenger vehicles) and power steering motors (in passenger vehicles) in both electric vehicles and internal combustion engine vehicles.

The Centre is planning a subsidy scheme for local production of magnets as part of the government long-term plan to boost supplies.

Secretary in the Heavy Industries Ministry Kamran Rizvi said that stakeholder consultations are underway to determine the quantum of subsidy to be offered under the scheme. If the total incentives involved cross Rs 1,000 crore, the scheme will be sent to the Union Cabinet for approval.

Since the actual production of rare earth magnets will take about two years, the government, along with the industry, is looking at alternative sources of procurement in the interim period, including Japan and Vietnam, Rizvi said.

The subsidy will facilitate investment for establishing processing facilities for companies to convert rare earth oxides into magnets. Indian Rare Earth Magnets Ltd, a PSU under the Ministry of Atomic Energy, is the sole repository of rare earths in India. They have enough rare earths to make 1,500 tonnes of magnets, officials said.

Officials said 30 automotive firms have sought authorisation from the Directorate General of Foreign Trade (DGFT) to import rare earth magnets from China a fortnight ago, so that production is not impacted negatively due to the shortage.