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The Indian government is set to finalise a subsidy scheme within 15-20 days to boost domestic rare earth magnet production, aiming to reduce reliance on Chinese imports. Consultations are underway to determine the subsidy amount, potentially requiring cabinet approval if it exceeds ?1,000 crore. View More

The government will decide on a subsidy scheme to support domestic production of rare earth magnets within 15 to 20 days, Union Minister for Heavy Industries and Steel H D Kumaraswamy said on Tuesday. Stakeholder consultations are currently underway to determine the exact quantum of subsidy to be offered. Kumaraswamy told reporters, “One Hyderabad-based company... they are showing interest. They have 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) I think within 15-20 days.” Secretary in the Ministry of Heavy Industries Kamran Rizvi said that if the total value of incentives proposed under the scheme exceeds ₹1,000 crore, it will need to be sent to the Union Cabinet for approval. “It depends on the level of incentives. If it is less than ₹1,000 crore, (heavy industries) minister and finance minister can do it. If it goes beyond ₹1,000 crore, it has to go to the Cabinet,” Rizvi said. “We do not know the quantum of subsidy required yet, stakeholder consultations are on, as the minister pointed out, so varied responses have come. Somebody wants 50 per cent, somebody wants 20 per cent, so it will be subject to a competitive bid, then we will know the quantum of support required,” he said. ET had reported last week citing a government official that India has firmed up a ₹3,500-5,000 crore scheme to incentivise production of rare earth minerals and derived magnets in the country and could be approved in a fortnight. Live Events You Might Also Like:Magnet crunch: Indian firms pitch supply chain plans to curb China’s rare earth dominance Also Read: Rare earths set to get up to Rs 5,000 crore incentive scheme China’s recent restrictions on exports of key metals have disrupted manufacturing in various countries, including India. These disruptions have affected sectors such as automobile production and semiconductor chip manufacturing. According to officials, 30 automotive firms applied for authorisation from the Directorate General of Foreign Trade (DGFT) two weeks ago to import rare earth magnets from China. The move is aimed at preventing further disruption to production due to the ongoing shortage. Several companies, including Indian advanced materials firms, have made proposals to the government to set up domestic supply chains for rare earth magnets, The Times of India reported earlier this week. The companies making such presentations include Midwest Advanced Materials, Entellus Industries, and the public sector firm Indian Rare Earths (IREL), sources told the newspaper. The sources also said that Secretary Kamran Rizvi has received presentations from these companies as part of the government’s broader efforts to develop local capabilities for rare earth magnet production . Rare earth magnets, including neodymium-iron-boron (NdFeB), are used in high-performance automotive applications. These include traction motors in electric two-wheelers and passenger vehicles, and power steering motors in both electric and internal combustion engine vehicles. The planned subsidy is expected to support investment in processing facilities for converting rare earth oxides into usable magnets. Indian Rare Earths Ltd, which operates under the Department of Atomic Energy, is currently the only public sector unit holding rare earth stockpiles in India. Officials said the PSU has sufficient rare earths to produce 1,500 tonnes of magnets. As the actual production of rare earth magnets in India is expected to take about two years, the government and industry are exploring interim procurement alternatives. “So you are aware that rare earth is available in Japan, in Vietnam, and efforts are going on to take from there,” Rizvi said. The Heavy Industries Ministry is leading the process of consultations with companies, assessing the level of investment support required and finalising the subsidy framework. The ministry’s aim is to build domestic production capacity and reduce reliance on Chinese imports. (You can now subscribe to our Economic Times WhatsApp channel) (You can now subscribe to our Economic Times WhatsApp channel)