India's Strategy for Rare Earth Magnets
India is engaging with companies to build long-term stockpiles of rare earth magnets by offering fiscal incentives for domestic production. This strategic move aims to reduce reliance on Chinese imports, especially after China's recent export restrictions.
Current Dependency on China
- China controls 90% of the processing of rare earth magnets, essential for industries like clean energy and defense.
- India's auto industry is particularly vulnerable, with companies like Suzuki Motor already facing production halts.
Government Initiatives
- The Ministry of Heavy Industries is drafting a scheme that includes production-based fiscal incentives and potentially funding the cost difference between Indian and Chinese magnets.
- The plan also involves boosting local demand through cost parity.
Challenges and Short-term Solutions
- Supply chain adjustments are lengthy, and immediate solutions include negotiating with Chinese authorities for quicker approvals.
- India's auto industry warns of potential operational halts by June due to shortages.
India's Rare Earth Resources
- India has the third-largest reserves of rare earths but mines only a small portion due to limited private investment.
- The National Critical Mineral Mission aims for self-reliance in rare earth resources.
Recent Developments
- India is exploring neodymium, a rare earth critical for the auto industry, and currently exports it to Japan due to lacking processing capabilities.
- Discussions at the Prime Minister's office considered the impact on the electric vehicle sector and potential tariff exemptions for necessary machinery imports.
