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India’s Rs 7,300 crore scheme to incentivise the local production of rare earth minerals and magnets could face hurdles, because of China’s latest curbs on exports of equipment needed to process the raw materials and manufacture the components critical to hightech industries.Countries like Germany and Japan have some technology and equipment required for processing rare earth materials, but they are much costlier than those from China, the leader in rare earth materials and extraction equipment globally, senior industry executives told ET. According to the International Energy Agency, China accounts for 61% of global rare earth production and 92% of processing. Rare earth magnets are critical components for electric vehicles, consumer electronics, wind turbines and industrial machinery. “China’s commerce ministry has issued a notification extending export controls also to rare earth production and processing equipment, and rare earth raw and auxiliary materials,” said a senior auto industry executive who did not wish to be identified. “This may impact the new scheme the Centre has announced to incentivise local manufacturing of rare earth magnets,” said the executive.Live EventsAs per an announcement by China’s Bureau of Security and Control earlier this month, export controls will be imposed on rare earth production and processing equipment which includes “centrifugal extraction equipment for rare earth processing; intelligent continuous impurity-removal and precipitation equipment for ionic rare earth ores”.Exporters of these items must apply for a licence as well as indicate whether they are “dualuse controlled” (where the items have both civilian and military applications), it said.“While the (Indian) government has been working on plans to attain self-sufficiency in rare earth magnet production, the challenge is the technology and the equipment are also controlled by China,” a second industry executive said. Sourcing equipment from Germany and Japan would shoot up costs and affect the viability of projects, he said.Earlier this month, the Expenditure Finance Committee greenlighted the incentive scheme that seeks to provide both capital and operational expenditure to support firms for setting up rare earth magnet processing units and supply chains in India. It proposes to earmark Rs 6,500 crore for capital expenditure and Rs 800 crore for operational expenditure. The scheme is scheduled to go for Cabinet approval shortly. 50 applications pending China’s latest restrictions come on top of the export controls Beijing put in place on April 4 on medium and heavy rare earthrelated items with a view to “safeguarding national security”, in response to US President Donald Trump’s reciprocal tariffs. Under the April 4 notification, exporters must seek a licence from China’s commerce department after getting an end user certificate from the buyer that the items would not be used for storing, manufacturing, producing, or processing weapons of mass destruction and their delivery systems.Add as a Reliable and Trusted News Source Add Now! (You can now subscribe to our Economic Times WhatsApp channel) Read More News onIndia rare earth productionChina export restrictionsrare earth magnetslocal manufacturingInternational Energy Agencyequipment technology challengeChina’s Bureau of Security and ControlExpenditure Finance Committeechinas commerce ministry (Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online....moreless (You can now subscribe to our Economic Times WhatsApp channel)Read More News onIndia rare earth productionChina export restrictionsrare earth magnetslocal manufacturingInternational Energy Agencyequipment technology challengeChina’s Bureau of Security and ControlExpenditure Finance Committeechinas commerce ministry(Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online....moreless
