Amid the rare earth crisis, India is exploring sourcing from Australia, Brazil, Japan or Vietnam, in addition to boosting local production through a subsidy scheme to the industry in the next 15-20 days, said HD Kumaraswamy, Minister of Heavy Industries, on Tuesday.

“We are working on it [rare earth magnet crisis]. Midwest, a Hyderabad-based company, has shown interest and they are targeting 500 tonne rare earth magnet production by this year-end, and next year, they are aiming for 5,000 tonne production,” Kumaraswamy told reporters here.

Senior officials at the Ministry of Heavy Industries said stakeholder consultations are underway to determine the quantum of subsidy to be offered under the new scheme and, if the total incentives involved are over ₹1,000 crore, then the scheme will be sent to the Cabinet for approval.

The rare earth magnet crisis that began in April is hurting the automotive industry, which is heavily dependent on China, a country that has a monopoly on production and has placed restrictions on supplies.

Rare earth magnets include neodymium-iron-boron (NdFeB). It is used for high-performance automotive applications, such as traction motors in electric vehicles (EVs) and power steering motors across vehicles variants — EV, petrol and diesel.

The government’s subsidy scheme for local production of magnets is part of a long-term plan to secure supplies. Indian Rare Earth Magnets Ltd, a public sector unit under the Ministry of Atomic Energy, is the sole repository of rare earths in India.

“We do not know the quantum of subsidy required yet, stakeholder consultations are on...so, varied responses have come. Somebody wants 50 per cent, somebody wants 20 per cent, so, it will be subject to a competitive bid, then we will know the quantum of support required,” said Kamran Rizvi, Secretary, MHI.

SPMEPCI portal

Meanwhile, the MHI also launched the portal for accepting applications under the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), which will remain open till October 21.

Rizvi said MHI was writing to all countries having automotive majors, including Germany, the US, the UK, Czechoslovakia, and their embassies for encouraging participation under the scheme.

While Mercedes-Benz and Tesla are not interested to invest under the scheme, the MHI was hopeful that there would many other companies who may show interest over the next four months.

Published on June 24, 2025