(MENAFN- Live Mint) New Delhi: The government plans to nudge the automobile industry to invest in research and development (R&D) of rare-earth-magnet-free technology, according to two officials aware of the plan, as the country seeks to break free from China's stranglehold and adopt cleaner solutions.

The Union heavy industries ministry plans to leverage funds from the government's ₹50,000 crore Anusandhan National Research Foundation (ANRF) towards this strategic push to counter China, which remains a dominant force controlling more than 90% of the world's rare earth processing capabilities, said one of the two officials quoted earlier.

“We are planning to push for more R&D from the companies themselves, and we will also assess whether the government needs to support these ventures,” said the official.

Initial consultations have been conducted to help develop this capability, the second official said. Both spoke on the condition of anonymity.

Also Read | A shadow of rare earths looms over Tata's semiconductor factory

India's R&D investments stand at 0.6-0.7% of GDP compared to 3.5% in the US and 2.4% in China, according to the government and Unesco data. The ANRF, which is targeted to last until FY28, aims to plug this gap. The central government's contribution to ANRF is ₹14,000 crore and the remainder has been raised through donations from public sector companies, private sector organisations, philanthropic entities and international bodies.

The push for innovation in rare-earth-magnet-free technology comes in tandem with the government's support for manufacturing rare-earth magnets. The ₹7,300 crore incentive scheme for magnet manufacturing is slated to be announced soon, with global rare earth oxide suppliers keen to support India's magnet-making process, Mint reported on 2 November.

“This sounds like a short-term and long-term approach in tandem,” said Abhay Tilak, director of the Indian School of Political Economy in Pune. The incentives for making magnets in India is a short-term solution, while a push for R&D away from rare earths may signal a long-term push, likely due to the massive environmental impact of this technology, he said.

Search for alternatives

In April, China restricted the export of some varieties of rare earth magnets, triggering a panic as these are commonly used in strategic sectors such as defence, electronics, renewable energy, and even automobiles. As stockpiles dwindled, India's automakers, including Ola Electric Ltd and TVS Motor Co., bet on alternatives such as light rare-earth magnets and rare-earth magnet-free components.

Queries emailed to Ola Electric and TVS Motor Co on 2 November remained unanswered. Queries to the heavy industries ministry and automakers Maruti Suzuki India Ltd, Tata Motors Ltd, Kia Motor India Ltd, Hyundai Motor India Ltd and Ather Energy Ltd also remained unanswered.

An emailed query to the Society of Indian Automobile Manufacturers (Siam) also remained unanswered.

Also Read | Why India attracts global rare earth majors Lynas, Iluka, Rainbow

Ola Electric opted to use rare-earth magnet-free traction motors in its scooters and bikes, while peer Ather Energy backed light rare-earth magnets. Ola Electric also secured production-linked incentives for its rare-earth-magnet-free motor in early October this year.

Sona Comstar Ltd, India's largest manufacturer of traction motors, also started building light-rare-earth magnet motors, Mint reported on 15 July this year.

"Over time, as alternatives to rare earth magnets emerge, designs for automotive parts will also evolve," said IV Rao, distinguished fellow for Transport & Urban Governance at The Energy and Resources Institute (Teri). For automakers, this may mean adjustments in vehicle design as rare-earth magnet motors are known to be compact, while their alternatives may take more space, he said.

China's flip-flop

About a week ago, four Indian companies received China's nod to import rare earth magnets. However, India's reason for seeking alternatives is also environmental.

“The reason for rare earth shortages is not that these compounds are rare in nature,” said Tilak of the Indian School of Political Economy.“Instead, it is because the mining and processing of these compounds and their products is expensive and extremely sensitive to the environment.”

Also Read | Mint Explainer | The race to break China's rare earth stranglehold

Mint reported on 4 September that the government had considered the environmental impact of mining and processing rare earths to make magnets, but any acute policy regulation would not be part of the incentive scheme.

The US and Australia shut down mining operations because they were energy-intensive and damaging to the environment, said Tilak, adding that if India invests in R&D, it should maintain a sustained and unwavering policy focus. Citing the country's“abysmally low” R&D spending, he said, "There should be a national consensus on pushing R&D spending in this sector to its logical end.”

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