India in talks with Japan, Vietnam on rare earth imports: Kumaraswamy

Business Standard

5 days ago

India is currently in talks with Japan and Vietnam to import rare earths in response to China's recent import restrictions. Additionally, the country plans to introduce an incentive scheme for processing rare earth oxides into magnets, which is expected to take two years. A decision on this scheme will be made in 15 to 20 days, Union Minister of Heavy Industries H D Kumaraswamy said.
China curbs exports of key materials
Following escalating tariffs imposed by former US President Donald Trump, Beijing enacted export restrictions on seven heavy and medium rare earth elements and magnets on 4 April. These elements—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—are crucial for defence, energy, and automotive technologies. Chinese companies must now secure defence licences to export these materials.
'We have had discussions with the mines ministry, and they are working on this issue. We expect to make a final decision within the next 15 to 20 days,' Kumaraswamy told reporters at the launch of the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) portal on Tuesday.
Business Standard earlier reported that the government was considering developing 3,000 to 5,000 incentive schemes and looking at alternative sourcing to mitigate risks from China's supply. India may also negotiate with China for motors and sub-assemblies if export norms on magnets are not relaxed.
Stakeholder consultations are ongoing, and the Ministry of Heavy Industries (MHI) has received varied proposals, with some firms requesting support levels of 50 per cent and others seeking 20 per cent. 'This will be subject to a competitive bidding process, which will help us determine the required level of support,' said Kamran Rizvi, secretary, MHI.
Domestic processing could take two years
The required support is significant, Rizvi said, as global rare earth oxide and magnet prices on the Shanghai Stock Exchange show only about 5 per cent difference. China's monopoly has kept magnet prices exceptionally low.
'The level of incentive we require aims to assist companies in the investment needed to transition from oxide to magnet production. The necessary government support must be quantified to ensure magnets produced in India are globally competitive,' Rizvi explained.
Processing rare earth oxides into magnets may take at least two years.
Midwest to supply 500 tonnes by year-end
When asked if Cabinet approval would be necessary, Rizvi said it depends on the size of the incentive. 'If the amount is less than ₹1,000 crore, our minister and the finance minister can approve it. Should it exceed ₹1,000 crore, Cabinet approval will be required. We are still assessing the required subsidy amount.'
Meanwhile, Midwest has expressed interest in processing rare earths and has committed to delivering 500 tonnes by the end of December this year, the minister confirmed.
Business Standard had also reported that Hyderabad-based Midwest Advanced Materials expressed interest in mining and processing rare earths with technology transferred from the Non-Ferrous Materials Technology Development Centre.
India's rare earth ecosystem and capacity
Currently, Indian Rare Earths Limited (IREL), a company under the Department of Atomic Energy, is the sole holder of rare earth materials in the country. It has sufficient resources to produce 1,500 tonnes of magnets annually.
Industry adapting to avoid production disruption
On possible production impacts starting in July, Kumaraswamy said companies are taking steps to minimise disruption. 'While there was an understanding that some disruption might occur, recent developments suggest improvement. No reports indicate a halt in production. Fully assembled components can still be imported, and companies are actively working on solutions.'
'We are discussing motors and their components. We may need to explore options if the disruptions persist long-term,' he added.
Separately, India is reaching out to countries including the US, Germany, Czechoslovakia, and Vietnam—along with their embassies—to attract investment from global automotive firms for electric vehicle manufacturing. A four-month application window will be given under the SPMEPCI scheme. As of now, Tesla has not expressed interest in participating.
'Ultimately, we will know which global automakers come on board by 21 October,' Rizvi said.