India's Auto Component Industry Faces Growing Uncertainty Over Chinese Rare Earth Magnet Restrictions

Indian automobile parts manufacturers are scrambling to secure supplies as China tightens controls on rare earth magnet exports. In the past two weeks, the number of Indian companies applying for Chinese import permits has jumped from 11 to 21, highlighting the industry's growing concerns, as reported by The Economic Times. This bottleneck has mainly been due to China’s new export rules since April, which require companies to get government approval before shipping rare earth magnets abroad. Additionally, buyers must now also provide detailed certificates proving that the materials won't be used for military purposes.

Major Indian firms like Bosch India, TVS Motor, and Uno Minda are among those waiting for approval. Sona Comstar had to resubmit its application after an initial rejection. Reports state that over 50 Indian companies depend on Chinese magnets to make these auto parts. While most have submitted the required paperwork, they're still waiting for China's commerce ministry to issue export permits.

(Also Read: India Halts Rare Earth Exports To Japan, Amid Severe Crisis Due To China)

The situation becomes all the more alarming as only Indian firms are stuck in the approval queue. America negotiated a special supply agreement with China, while European manufacturers have already received their permits. While the Indian government is facilitating talks, the process is going very slowly.

Even though magnet imports represent a small portion of total costs, missing even one part can stop entire vehicle production lines. As was pointed out by Bajaj Auto’s Executive Director, Rakesh Sharma, as the entire Indian auto industry would get seriously impaired if this crisis is not averted. India has already brought 870 tonnes of rare earth magnets worth ₹306 crore last year. However, companies estimate that their current stock will run out by early July if new supplies don't arrive soon.

(Also Read: EV Production In India Threatened By Component Supply Disruption, Crisil Sounds Alarm)

The situation puts India's growing automotive sector at risk, potentially affecting both domestic production and export plans.