Top power authority mulls sops for critical components as China curbs rare earth supply

New Delhi: The Central Electricity Authority (CEA) has prepared a draft list of critical components, including permanent magnets, voltage transformers and super capacitors, that will require support for local manufacturing as China’s rare earth curbs threaten India's energy transition goals.

The CEA has written to the industry stakeholders to identify the most critical components in the sector which India currently imports, seeking suggestions on which parts need to be prioritized for fiscal support.

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Several industries in the country, including automobile and renewable energy sectors, are facing the crunch of rare earth elements and magnets as China, which dominates the global production, has tightened its supply. That has prompted the government and companies to look at ways to become self-reliant in the long run.

The CEA has proposed financial incentives including subsidies for voltage transformers, pipes for gas-insulated bus ducts and bus bars and hollow core insulators that are largely imported from China; and insulating spaces of gas partitions imported from Taiwan. For electronic components, semiconductor devices such as thyristors, magnetic cores and direct current (DC) capacitors, the power sector body has also suggested international technology partners, along with financial incentives.

Along with sops and technology transfer, the authority has recommended policy reforms and the development of testing and certification facilities to boost domestic manufacturing of permanent magnets for actuators, which provide a consistent magnetic field to power movement. These magnets are also imported from China.

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In a 11 June letter to public sector undertakings, manufacturers and power sector players that use these components and the Indian Electrical & Electronics Manufacturers' Association (IEEMA), the CEA said that it has prepared the draft list of critical items that are imported, besides mentioning support required by manufacturers for the indigenization of these items.

"In this context, comments/suggestions/inputs are invited from all stakeholders, including the users in PSUs and other industries to decide on prioritization of items mentioned in the enclosed list (Annexure) of identified critical items or any additional items which stakeholders consider as critical & support required for their indigenous development," it said.

The authority also asked the industry to mention cost, volume required and percentage contribution of critical items in the total cost of the product.

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"The purpose is to prioritize items which are more critical. It would be a great help, if any agency/stakeholder can share data about the total quantity and/or value of import of this item during past three years. Also, it would be better if desired support level can be clearly quantified in terms of percentage/ forms of financial incentives (interest subvention/grant) and subsidies so the total financial implication may be quantified and comprehensive proposal can be prepared based on criticality of item." 

The stakeholders need to submit their comments by 20 June.