New Delhi: In a move aimed at boosting India’s domestic capabilities at a time when supply chain disruptions, especially from China, are threatening to derail rare earth supplies, Union Finance Minister Nirmala Sitharaman Sunday announced a string of measures to give a leg up to the sector.
Sitharaman proposed that the Centre will support the mineral-rich states of Odisha, Kerala, Andhra Pradesh and Tamil Nadu to establish dedicated Rare Earth Corridors to promote mining, processing, research and manufacturing.
Rare earth magnets are one of the strongest types of permanent magnets and are vital for electric vehicles, renewable energy, electronics, aerospace, and defence applications.
India produces Rare Earth Elements (REE) in the form of high-purity rare earth oxides from RE-bearing mineral monazite. It imports rare earth magnets from China at present, as it does not have the technology to produce rare earth permanent magnet metals, rare earth permanent magnet alloys and rare earth permanent magnets on a commercial scale.
Rare earth minerals are present in Beach Sand Minerals (BSM), the principal ore of rare earths in India. In BSM ore, the prescribed substance monazite is present, a phosphate mineral of Rare Earth Elements containing uranium and thorium.
Zero customs duty on monazite
The finance minister also announced that the customs duty on monazite, one of the main sources of rare earths, would be reduced to zero from 2.5 percent.
Currently, India produces approximately 4,000 tonnes of monazite, which is inadequate for domestic needs.
“We are dependent on imports. Reducing customs duty on monazite to nil is a welcome move,” a senior heavy industries ministry official, who did not want to be named, said.
This comes close on the heels of the Union cabinet approving the ‘Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets’ with a financial outlay of Rs 7,280 crore last November.
The total duration of the scheme will be seven years from the date of award, including a two-year gestation period for setting up an integrated REPM manufacturing facility, and five years for incentive disbursement on the sale of REPM.
Under the scheme, 6,000 metric tonnes per annum (MTPA) of integrated REPM manufacturing will be established in India, giving a big fillip to domestic production and reducing imports.
The scheme will support the creation of integrated REPM manufacturing facilities, involving conversion of rare earth oxides to metals, metals to alloys, and alloys to finished REPMs.
India’s consumption of REPMs is expected to double by 2030 from 2025. The country’s current demand for REPMs is met primarily through imports.
Sitharaman also proposed a basic customs duty exemption on the import of capital goods required for the processing of critical minerals in India.
(Edited by Sugita Katyal)
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