India's Biggest Rare Earth Magnet Importer Sona Comstar Plans Domestic Manufacturing

India's leading rare earth magnet importer has announced an ambitious plan to setup domestic manufacturing capabilities for critical electric vehicle (EV) components, in response to government initiatives aimed at reducing dependence on Chinese suppliers following recent export restrictions on rare earth magnets, news agency Reuters reported.

Domestic Magnet Production Plans

Sona Comstar, officially registered as Sona BLW Precision Forgings, has emerged as the first firm amid India's push towards rare earth magnet self-sufficiency. 

The Gurgaon-headquartered company represents the first homegrown company to publicly announce manufacturing plans following the government's newly unveiled incentive programme.

The automotive component manufacturer currently holds the distinction of being India's largest importer of these specialised magnets, which are essential for EV motors and various automotive applications.

Global Supply Chain Concerns

Beijing's decision to implement export limitations on rare earth magnets in April has created ripple effects across international markets. These restrictions form part of China's broader response to American tariff policies, despite recent bilateral agreements to expedite export approval processes.

China maintains dominant control over global rare earth magnet production, accounting for approximately 90 per cent of global output. 

China's position has prompted governments and corporations internationally to actively seek alternative supply sources and develop independent manufacturing capabilities.

Vulnerability To Chinese Supply Disruptions

"Being the largest importer of rare earth magnets, we are the single largest affected party in the country. We have to look at India's self-sufficiency on magnets and are working with the government on it," Sona Comstar CEO Vivek Vikram Singh was quoted as saying in a Reuters interview.

The company's exposure became evident through its import data, with 120 metric tonnes of magnets sourced from Chinese suppliers during the previous financial year. Singh indicated that planned imports were set to increase to 200 tonnes this year to accommodate expanding electric vehicle client requirements.

Manufacturing Investment Plans

Sona Comstar's manufacturing ambitions are backed by robust financial performance and available capital resources. The company has demonstrated impressive growth trajectory, achieving a five-fold revenue increase over the past five years, reaching more than $400 million in annual turnover.

Singh confirmed the organisation has adequate funding for local manufacturing initiatives, though final investment decisions will depend on government incentive program details and additional operational factors.

Supplier For Tesla, Other Automakers

The automotive supplier maintains relationships with prominent manufacturers including Tesla and Stellantis, providing specialised gears and motors for electric and conventional vehicles. Electric vehicle customers currently represent approximately one-third of the company's total revenue stream.

Geographically, the US constitutes about 40 per cent of Sona Comstar's revenue base, surpassing contributions from India and European markets. However, recent strategic acquisitions are expected to shift this balance significantly.

India's Position In Global Rare Earth Market

India's emergence as a potential rare earth magnet manufacturing hub is supported by favourable market conditions. The country has the world's third-largest automotive market and possesses the fifth-largest global reserves of rare earth materials, providing both demand-side opportunities and supply-side advantages.

However, experts acknowledge that developing comprehensive mining and processing capabilities for rare earth materials requires significant time investment, meaning immediate solutions for reducing Chinese dependency remain limited.

However, the government's new incentive programme is a crucial step toward establishing domestic manufacturing capabilities, though specific details and implementation timelines have yet to be finalised.