India is holding talks with companies to establish long-term stockpiles of rare earth magnets by offering fiscal incentives for domestic production, people familiar with the matter said.
Building such a supply chain could take years, but would reduce India's dependence on shipments from China, which sent shockwaves across global industries, particularly autos, with its April 4 move to curb exports of rare earth materials.
China controls 90% of the processing of such magnets, also used in industries such as clean energy and defence.
Now Prime Minister Narendra Modi's government wants to develop domestic manufacturing capabilities and is considering offering production-based fiscal incentives to companies, said two sources who sought anonymity as the talks are private.
The scheme, being drafted by the ministry of heavy industries, also envisions partly funding the difference between the final price of the made-in-India magnet and the cost of the Chinese imports, the first source said.
This would help achieve cost parity and boost local demand, the source said, adding that funding for the scheme has yet to be decided, with the government likely to meet industry officials next week to finalise the details.
The heavy industries ministry did not respond to Reuters' queries.
Although a state-run firm, IREL, has been mining rare earth materials for years, these are mainly used by the atomic energy and defence units, with most supplies for other uses still imported from China.
India's move comes as auto companies the world over flag risks that they could face supply disruptions within days.
In Japan, Suzuki Motor, has suspended production of its Swift car because of China's curbs.
In India, auto industry body SIAM has privately told the government it expects production "to come to a grinding halt" within a timeframe starting from the end of May or early June.
The heavy industries ministry also plans to send a delegation of auto industry executives to meet officials in Beijing to push for faster approvals, with two industry officials warning that was the only near-term solution.
"The short-term solution has to be to get Chinese authorities to clear things," said one of the executives, who fears shortages at his company. "A radical shift in supply chain is not possible in the short term."
Building such a supply chain could take years, but would reduce India's dependence on shipments from China, which sent shockwaves across global industries, particularly autos, with its April 4 move to curb exports of rare earth materials.
China controls 90% of the processing of such magnets, also used in industries such as clean energy and defence.
Now Prime Minister Narendra Modi's government wants to develop domestic manufacturing capabilities and is considering offering production-based fiscal incentives to companies, said two sources who sought anonymity as the talks are private.
The scheme, being drafted by the ministry of heavy industries, also envisions partly funding the difference between the final price of the made-in-India magnet and the cost of the Chinese imports, the first source said.
This would help achieve cost parity and boost local demand, the source said, adding that funding for the scheme has yet to be decided, with the government likely to meet industry officials next week to finalise the details.
The heavy industries ministry did not respond to Reuters' queries.
Although a state-run firm, IREL, has been mining rare earth materials for years, these are mainly used by the atomic energy and defence units, with most supplies for other uses still imported from China.
India's move comes as auto companies the world over flag risks that they could face supply disruptions within days.
In Japan, Suzuki Motor, has suspended production of its Swift car because of China's curbs.
In India, auto industry body SIAM has privately told the government it expects production "to come to a grinding halt" within a timeframe starting from the end of May or early June.
The heavy industries ministry also plans to send a delegation of auto industry executives to meet officials in Beijing to push for faster approvals, with two industry officials warning that was the only near-term solution.
"The short-term solution has to be to get Chinese authorities to clear things," said one of the executives, who fears shortages at his company. "A radical shift in supply chain is not possible in the short term."
13 days ago
