Entire Indian Auto Industry “Will Get Seriously Impaired”: Rakesh Sharma

Bajaj Auto’s Executive Director, Rakesh Sharma cites that there might be some troubles that the Indian automotive sector is likely to face with the shortage of rare earth magnets. A key component in the electric motor of an EV, the non-availability of rare earth magnets will impact the company's production plans by July. This is primarily due to complex import procedures from China. Sharma described the approval process as burdensome, requiring multiple certifications and declarations that the materials won't be used for military purposes.

The lengthy bureaucratic chain involves approvals from several Indian government departments, the Chinese embassy, and Beijing's final export authorisation. Despite the auto sector filing over 30 import requests, none have received approval yet. 

Chinese officials indicate the review process takes 40-45 days, but no applications have completed this cycle. Current inventory levels are dropping rapidly across the industry, threatening production schedules. "If shipments don't arrive soon, our July manufacturing will face serious problems," Sharma stated, emphasising this affects the entire automotive sector, not just Bajaj. 

The Indian auto industry relies almost exclusively on Chinese suppliers for these specialised magnets. While rare earth deposits exist in India and elsewhere, setting up extraction and processing facilities requires substantial time and capital investment. Switching to alternative materials presents its own challenges, as replacement components need extensive testing and validation—a process that takes months or years rather than weeks. The supply crunch threatens the growing electric vehicle market segment. 

However, Sharma remains cautiously optimistic that either current approval channels will open up or alternative solutions will emerge throughout the year. Hopefully, this geopolitical situation will iron itself out soon. Bajaj has been enjoying much success with electrics in both two- and three-wheelers. And if this potential issue is nipped in the bud, then it, as well as other EV players, shouldn’t feel the heat as much.

(Source: Autocar Professional)