India Helping Auto Industry Meet Chinese Officials On Rare Earth Export Ban: Sources

The Prime Minister's Office and the Indian embassy in China are helping Indian auto companies to hold a meeting with the Chinese commerce ministry in Beijing amid the neighbouring country's ban on export of rare earth magnets, people with direct knowledge of the matter said.

China controls 90 per cent of the processing of such magnets, also used in industries such as clean energy and defence, apart from the automotive industry.

India's three ministries - Heavy Industries, External Affairs, and Industry and Commerce - are involved in the discussions, people familiar with the matter said.

A 50-member delegation of representatives from original equipment manufacturers (OEMs), Society of Indian Automobile Manufacturers (SIAM), and Automotive Component Manufacturers Association of India (ACMA) planned to visit China this week, but that did not work out.

India is likely to consider having a proper rare earth magnet policy of its own to avoid the risk of getting caught in such a situation again, but that would take two-three years.

There has been no import of rare earth magnets from China and no new licence has been issued since April 4, the day China announced its export ban.

India is looking to develop domestic manufacturing capabilities and is considering offering production-based fiscal incentives to companies, news agency Reuters reported quoting two unnamed sources.

The scheme, being drafted by the Ministry of Heavy Industries, also envisions partly funding the difference between the final price of the homegrown magnet and the cost of the Chinese imports. This would help achieve cost parity and boost local demand, Reuters reported, adding that funding for the scheme has yet to be decided, with the government likely to meet industry officials next week to finalise the details.

The government company IREL (India) Ltd has been mining rare earth material for years, which are mainly used by atomic energy and defence units, with most supplies for other uses still imported from China.

In Japan, Suzuki Motor has suspended production of its Swift car because of China's curbs.