Team Siliconindia

• India proposes Rs 25,000 crore incentive scheme to boost domestic production of rare-earth magnets critical for EVs and wind turbines, aiming to reduce reliance on China.
• Vedanta, JSW Group, and Sona BLW show early interest, the plan targets 4,000 tons of magnets in 7 years with subsidies of up to Rs 6 billion per 1,000-ton capacity.
• PM Modi urges global mineral fairness at BRICS, as India prepares policy to support local magnet manufacturing with strict domestic sourcing norms.

A suggested scheme by India to stimulate domestic manufacture of rare-earth magnets has attracted preliminary interest from a group of big conglomerates, individuals close to the situation reported, as the nation moves to reduce its dependence on China for these crucial electric-vehicle and wind-turbine components.

The Indian government is going to implement an incentive scheme of up to 25 billion rupees ($290 million) for private industry companies that produce these magnets, the people said, asking not to be identified because the information is not public. Mining conglomerate Vedanta Group controlled by billionaire Anil Agarwal, Sajjan Jindal's JSW Group and EV component manufacturer Sona BLW Precision Forgings Ltd. are among those who have expressed interest in this venture.

The policy outline will probably be recommended to the cabinet for approval shortly, the individuals said. The ultimate expenditure on the program is under internal deliberation and may vary, they added.

India is stepping up the pace in this regard after China, which holds nearly 90% of the globe's rare earths processing capability, imposed tighter export restrictions on rare earths in the face of its trade war with the US. It has interrupted supply chains of global automakers, including those based in India.

Indian Prime Minister Narendra Modi stressed the importance of a sustainable supply of key minerals at the BRICS summit in Rio de Janeiro at the weekend. "It's important to ensure that no country uses these resources for its own selfish gain or as a weapon against others", Modi said during the event.

The South Asian country wants to assist three to four big firms in manufacturing approximately 4,000 tons of neodymium and praseodymium-based magnets from domestically mined raw materials within seven years, said the people and a policy document accessed by Bloomberg News.

There will be a gestation period of two years and incentives will be implemented over five years after production begins, the individuals said. India, which has a fast-expanding electric vehicle industry, is contemplating an investment of as much as 6 billion rupees per 1,000 tons of capacity under the plan, they said.

The Ministry of Heavy Industries, Vedanta and JSW didn't immediately respond to an e-mailed request for comments.

Making the magnets will secure the supply chain for Sona BLW India's largest producer of electric vehicle traction motors, Chief Executive Officer Vivek Vikram Singh said in an interview with Bloomberg News. The firm would also consider approaching a partner with a company to design technology for the magnets, Singh said.

India is considering incentives for the producers of rare-earth magnets, Heavy Industries Minister H.D. Kumaraswamy announced at a function in New Delhi last month, without further details.

While the government's attempt to increase rare earths aligns with a global push, its budget is low and its timeline remains ambitious. Years can pass before mines and processing plants can be constructed, and expertise remains predominantly in China.

Though India has tried to increase production either at home or through foreign projects long enough, they are still in their infancy. State-run Khanij Bidesh India Ltd. is spearheading initial efforts with mining concessions in Latin America and is in talks with Argentina, Zambia and Australia among others.

Today, making magnets in India unsubsidized is close to impossible. The required oxide comes from state-owned Indian Rare Earths Ltd., and a project's return on investment in this industry is minus with capital and operating subsidies alike, the individuals said.

Under the draft plan, the government will invite firms to bid for yearly production capacity of between 500 tons and 1,500 tons, it said.

To qualify, manufacturers must meet strict norms, including the requirement that half of the value of the final product must come from locally produced neodymium-praseodymium oxide, an ingredient crucial for making high-performance magnets, according to the proposal.