Caught between China’s rare earth curbs and India’s EV push, e-bus and e-truck makers may get a six-month waiver to import motors without losing incentives.
The Indian government is set to grant leading electric bus and truck makers a six-month relaxation to import fully built motors containing heavy rare earth materials, without losing eligibility for incentives under the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-Drive) scheme.
Companies including Tata Motors, Ashok Leyland, PMI Electro Mobility, JBM Auto, EKA Mobility, Olectra Greentech, Propel and IPLT Demo are expected to benefit. The reprieve, valued under the ₹109-billion scheme, will allow them to claim subsidies despite the imported content, provided all other localisation criteria are satisfied.
However, the exemption will not apply to two- and three-wheeler makers. Officials said firms such as Ola Electric and Bajaj Auto are already adopting alternatives like low rare-earth or ferrite-based magnets, and even magnet-less motor designs, reducing their reliance on imports.
The policy response comes as commercial EV manufacturers struggle with shortages of permanent rare earth magnets, caused by China’s new licensing regime for exports. Approvals for Indian buyers have slowed, creating bottlenecks.
Unlike petrol or diesel vehicles, which need about 100 grams of rare earth magnets, an EV requires nearly 3 kilograms. Electric buses can use 7–30 kilograms. With China controlling 70% of mining and 90% of magnet production globally, supply risks remain acute.
The timing is crucial, as the government is preparing tenders for nearly 10,000 e-buses under the PM E-Drive scheme. Nearly half of the outlay is earmarked for buses and trucks, with ₹43.91 billion for e-buses and ₹5 billion for clean trucks.
Incentives for smaller EVs will expire in March 2026, but heavy vehicles will continue to receive support until March 2028.
Officials stressed the relaxation is temporary and will end once China resumes timely approvals or India’s domestic magnet programme, worth over ₹50 billion, becomes viable.
