PLI-like plan in works to secure supplies of rare earth magnets  

A worker places discarded hard drives on a conveyor belt during the processes of recycling the rare earth magnets inside of them at Hitachi Plant Technologies Ltd.’s Matsudo research laboratory in Matsudo City, Chiba Prefecture, Japan, on Monday, Dec. 6, 2010. Hitachi Ltd. said it developed machinery to harvest rare earth metals from discarded hard-disk drives and compressors as electronics makers seek to reduce their reliance on Chinese supply. Photographer: Kiyoshi Ota/Bloomberg
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KIYOSHI OTA

India is looking at a two-pronged strategy to secure rare earth elements. An immediate plan for acquiring the critical EV-making component includes pushing end-user certificates (EUCs) for companies that source rare earth magnets from China.

China controls 50 per cent of the production of rare earth elements, 70 per cent of the processing and 90 per cent of the supplies. In April, China clamped down on exports, demanding guarantees that these magnets are used for civilian, and not defence, purposes. The second, long-term strategy, is to develop an incentive-based manufacturing plan over a 7/10-year period with an outlay of ₹3,000 crore to build capacities of up to 4,000 tonnes.

Sources told businessline that a high-level meeting was convened last week where line ministries identified over 30 companies in India that source rare earth magnets from China, for supplying to OEMs (original equipment makers).

These companies include Brakes India, Kyocera AVX Components, Hitachi Astemo Chennai Private Ltd, Continental Automotive, Minda Instruments, Sona Comstar, Uno Minda and Varroc Engineering. Half of these companies have initiated the EUC application process, while some, such as Bosch India, Brose Automotive Systems, Continental, Hitachi Astemo, and Yantai Dongxing Magnetic Material, have already received endorsements from the Chinese Embassy. They are awaiting approval from China’s Ministry of Commerce. Sona Comstar’s application is the sole one to be rejected so far.

An industry delegation is slated to visit China later this month to accelerate the issue of export licences based on the EUCs submitted. This delegation, an industry source confirmed, will comprise industry representatives and meet with Chinese suppliers and Indian Embassy officials, without the Centre’s participation.

The certification process, following approvals from India’s Directorate General of Foreign Trade (DGFT) and the Ministry of External Affairs (MEA), includes verification and stamping of the EUC by the Chinese Embassy in India, after which the Indian importer sends the certificate to the Chinese exporter.

India imports approximately 3,600 tonnes of rare earth magnets annually, with the automotive industry accounting for 800-900 tonnes. The country is entirely dependent on imports for this segment.

Local Production

To cut the dependence on China, India is also developing an incentive-based production scheme for rare earth magnets. While not formally named a Production Linked Incentive (PLI) scheme, it will function similarly, with an estimated outlay of ₹3,000 crore. This scheme is envisioned with a 2/5-year gestation period, followed by sops over another five years in tranches.

Incentives will be structured as a percentage of the sales value and the government is exploring import duty exemptions to further boost domestic manufacture. A key focus of this initiative will be to prioritise domestic value-addition, aiming for a capacity ramp-up of up to 4,000 tonnes over 7-10 years.

Published on June 9, 2025