The government is considering a six-month relaxation for electric bus and truck manufacturers, allowing them to import fully assembled motors containing heavy rare earth materials without losing eligibility for incentives under the Rs 109-billion PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-Drive) scheme.

The relief is expected to benefit companies such as Tata Motors, Ashok Leyland, PMI Electro Mobility, JBM Auto, EKA Mobility, Olectra Greentech, Propel, and IPLT Demo. The exemption will apply provided all other localisation requirements are met.

However, officials clarified that the reprieve will not extend to two-wheeler and three-wheeler manufacturers. Companies like Ola Electric and Bajaj Auto are reportedly already adopting alternatives such as low rare earth magnets, ferrite-based magnets, and magnet-less designs, reducing the need for relaxation in this segment.

E-buses and e-trucks remain highly dependent on permanent rare earth magnets and face acute supply shortages due to China’s new licensing policy, which has delayed export approvals to Indian component makers. An EV typically requires about 3 kg of rare earth magnets, compared with 100 grams in an internal combustion vehicle. For electric buses, the requirement can range between 7 and 30 kg.

With China controlling nearly 70 per cent of rare earth mining and 90 per cent of magnet production, the supply disruption poses a strategic challenge.

The relief comes as the government prepares to launch a tender for 10,000 e-buses under the PM E-Drive scheme. The programme allocates nearly half its outlay to buses and trucks — Rs 43.91 billion for e-buses and Rs 5 billion for clean trucks — with support continuing until March 2028. Subsidies for two and three-wheelers will end in March 2026.

Officials emphasised that the import relaxation is temporary and will be withdrawn once China resumes timely approvals or domestic alternatives become viable. Alongside, the government is developing a Rs 50-billion rare earth magnet manufacturing programme to produce 6,000 MT of permanent magnets locally and reduce import dependence. n

News source: Financial Express