Centre weighing incentives to boost rare earth processing, says govt official

New Delhi: India’s rare earth processing capabilities are likely to receive government support, a senior official said on Tuesday, adding that efforts are underway to source rare earth magnets from countries such as Vietnam and Japan.

"The total quantum of investment needed for a rare earth processing is being worked out, how much support will be needed is being worked out. Stakeholder consultations are ongoing, and there have been a variety of responses. Some want 50% incentive, some want 20%," the official said, adding that the proposed support would cover processing rare earth oxides into magnets.

The official clarified that the government intends to incentivize the processing of rare earth elements, not the sourcing of raw materials.

Responding to a query about alternative sources for rare earth magnets in light of China's export restrictions, the official said, "Rare earths are available in Japan and Vietnam, and efforts are going on to bring it from there."

Mint had reported on 17 June that the government is planning to offer grants to private companies for rare earth processing, targeting a 10% share of the global processing capacity.

At the same event, heavy industries minister HD Kumaraswamy launched a portal for the implementation of the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). The programme aims to attract foreign electric vehicle (EV) makers by offering reduced import duties on fully built electric cars for five years, provided they establish manufacturing facilities in India.

Speaking at the launch, Kumaraswamy said US-based Tesla Inc has not altered its stance on investing in India. "There is no further development about Tesla," he said. "They want to sell their cars and have shown interest in opening showrooms."

The ministry expects foreign automakers to apply for benefits under SPMEPCI within the next four months. The portal, which went live on Tuesday, will accept applications until 21 October.

To be sure, the portal may be opened again if necessary, but only up to 15 March 2026, officials said at the briefing.

The official also said the government is actively engaging with global automakers and foreign embassies to attract participation. "We are trying to get the best people to participate. So, we have written to all the major global OEMs (original equipment manufacturers) and we have written to embassies of major automotive countries we know of. In Asia, it would be Vietnam. In Europe, it will be Germany and Czechoslovakia. Also, the US and the UK."

Under the scheme, foreign EV makers must invest a minimum ₹4,150 crore (approximately $500 million) in plant and machinery, and roll out a locally manufactured vehicle within three years. Within the same period, automakers must achieve 25% localisation, increasing to 50% over the subsequent two years.

For five years, participating companies can import up to 8,000 completely built-up (CBU) units each year for five years at a reduced import duty of 15%, compared to the standard duty of at least 70%.

According to guidelines notified by the ministry on 2 June, companies may allocate up to 5% of their total investment toward EV charging infrastructure. Investments in research and development will also count toward total investment requirements.

The same day, minister Kumaraswamy had said that foreign automakers Mercedes-Benz, Kia, Hyundai, and Skoda-Volkswagen had shown interest in the scheme during consultations.