India extends deadline for $770 mn rare earth magnet incentive scheme to attract more applications

Mumbai: The heavy industries ministry on Thursday extended the deadline to submit bids for the production-linked incentives (PLI) scheme to make rare earth magnets by a month to 29 July.

This is the second such extension of the application deadline, which was first slated to end on 28 May this year and was later extended to 29 June.

The extension came after over half a dozen potential applicants requested the government for more time, said two people in the know. So far, the scheme has received only four bids, the people said, compared with the ministry’s plan to award benefits to five companies to achieve a slated annual production of 6,000 tonnes of magnets.

After the ₹7,280-crore ($772 million) incentives scheme was announced last November, 26 companies initially evinced interest and turned up for the pre-bid meeting in April this year.

According to one of the interested bidders, who did not wish to be named, the government called potential bidders on Thursday evening to inform them that the bid was being postponed and followed up with an email on Friday. The ministry also updated the bid due date to 29 July on its website on Friday.

“We were surprised to get an extension letter as the government had insisted it was ready to finalize the tender by early July,” the bidder said.

Industry watchers said the government’s move to postpone the tender deadline is well within its rule.

“In an event that there are fewer bidders than potential awardees and there are at least twice as many who have sought an extension to the scheme, then the government can exercise its discretion to extend the tender,” said a senior heavy industries ministry official who did not wish to be named.

In this case, the government received four bids against five awardees and eight requests for extensions, this official said.

“As much as getting the scheme moving, the government also has to ensure that there is enough competitive bidding given the critical nature of its plan,” said Deependra Singh, former chairman and managing director of IREL (India) Ltd, a public sector firm responsible for mining and processing rare earth metals.

The PLI scheme was conceptualized to kick-start a rare earth magnet industry in India after China restricted exports of these magnets last year during its trade dispute with the US. China controls almost the entire global supply of rare earth magnets, which are vital for making everything from motors that power electric vehicles to wind turbines, fighter jets, and defence systems.

India is estimated to require about 3,000-4,000 tonnes of these magnets a year and buys about 80-90% of its requirement from China.