The Central Electricity Authority (CEA) has proposed to offer incentives to domestic manufactures producing critical components required in the power sector such as magnets and voltage transformers in a bid to reduce reliance on China.

The Authority has prepared a draft list of critical items that are presently being imported, along with support required by manufacturers for indigenisation of these items. The list has been prepared in consultation with stakeholders such as the industry body, Indian Electrical & Electronics Manufacturers’ Association (IEEMA).

It has invited all the stakeholders, including PSUs and other industries, to decide on prioritisation of the identified critical items or any additional items which stakeholders consider as critical and support is required for their indigenous development. The last date is June 20.

Other countries in the list include France, South Korea, Japan, Germany and the US.

Critical components

The CEA has asked stakeholders to share suggestions on cost, volume required and the percentage contribution of the critical item in the total cost of the product. The purpose is to prioritise items which are more critical.

Stakeholders have also been asked to share their suggestions on the desired support level in terms of financial incentives (interest subvention or grant) and subsidies. This would aid in quantifying the total financial implication and help in drafting a comprehensive proposal.

The rationale behind the draft list of critical components is to reduce the reliance on China for critical components and minerals, while moving towards some level of self-sufficiency.

This development comes close on the heels of China tightening supply of rare earth magnets forcing the government and industries such as automobiles and electronics to diversify sources for procuring these critical items as well as move towards self-sufficiency.

The critical items identified by the CEA include voltage transformers, semiconductor devices such as Thyristors and DC capacitors, super capacitor, printed circuit boards, neodymium-iron-boron magnets, and specialised magnetic core materials.

Suggestions

Welcoming the development, Subharth Saha, Associate Director of Power Sector Advisory at Nangia & Co, said while the current list appropriately captures major equipment categories, a key area that needs to be simultaneously addressed is the set of critical materials that directly feed into the manufacturing of these equipment.

“It is suggested that in addition to equipment-level indigenisation, there is a requirement to simultaneously target certain critical materials which are currently being imported. Certain advanced power electronic materials such as silicon carbide (SiC) devices, and storage-related materials like battery-grade lithium, nickel and graphite, along with insulating gases (SF₆ and substitutes) should be considered for inclusion,” Saha told businessline.

He emphasised on creating a separate and parallel list of ‘Strategic Power Sector Materials’, which may serve as the basis for targeted policy interventions, industry-academia collaborations, public-private partnerships, and appropriate incentive structures such as production-linked incentives, capital subsidies and public procurement support.

To support material-level indigenisation, Saha said there is a need to promote vertical integration of supply chains and encourage the establishment of full-fledged giga-factory models (like manufacturing of PV modules, storage systems and electrolysers).

“Simultaneously, collaborations should be fostered for developing or acquiring upstream assets for securing critical raw materials, including partnerships with mining/ drilling companies to enable technology transfer,” he suggested.

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Published on June 13, 2025