India is to nearly treble the size of its rare earth magnet manufacturing incentive scheme to more than Rs 7,000 crore in a significant effort to increase domestic capacity in the vital rare earth industry.
According to sources, the action comes as a number of countries, including India, increase their attempts to create a trustworthy supply chain for rare earth magnets, which are essential parts of cellphones, wind turbines, electric cars, and defense systems, in the face of China’s tightening export regulations.
Approximately 90% of the world’s rare earth production is being processed in China. As trade tensions with the US escalated in April of this year, Beijing tightened export limits on vital minerals, hurting global supplies to clean energy and automakers.
The goals of India’s enlarged production-linked incentive (PLI) program are to lessen reliance on Chinese imports, encourage domestic manufacturing, and draw in private investment.
In order to guarantee safe access to the raw materials required for the creation of magnets, the government is also looking into forming alliances with countries that have abundant natural resources.
The projected increase in incentives, according to industry analysts, is a reflection of India’s larger plan to fortify its vital minerals ecosystem, which includes value addition, high-tech manufacturing, exploration, and mining.
In order to protect India against supply-chain disruptions worldwide, the PHD Chamber of Commerce and Industry (PHDCCI) had earlier in the day urged the government to establish a specialized Department of Critical Minerals and implement “aggressive mineral diplomacy.”
Similar to the US oil reserve strategy, the chamber likewise recommended for strategic mineral stockpiling and interministerial coordination.
Critical minerals will play a major role in the global energy transition, experts have emphasized again and over again.
While renewable energy technologies like solar and wind require up to three times as many minerals as conventional sources, electric vehicles are expected to be six times more mineral-intensive than conventional cars.
Reports state that India wants to establish itself as a major role in the global clean energy and electronics value chains in addition to bolstering its industrial base by increasing its output of rare earth magnets.