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India is holding talks with companies to establish long-term stockpiles of rare earth magnets by offering fiscal incentives for domestic production, people familiar with the matter said.
Building such a supply chain could take years, but would reduce India's dependence on shipments from China, which sent shockwaves across global industries, particularly autos, with its April 4 move to curb exports of rare earth materials.
China controls 90% of the processing of such magnets, also used in industries such as clean energy and defence.
Now Prime Minister Narendra Modi's government wants to develop domestic manufacturing capabilities and is considering offering production-based fiscal incentives to companies, said two sources who sought anonymity as the talks are private.
The scheme, being drafted by the ministry of heavy industries, also envisions partly funding the difference between the final price of the made-in-India magnet and the cost of the Chinese imports, the first source said.
This would help achieve cost parity and boost local demand, the source said, 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 heavy industries ministry did not respond to Reuters' queries.
