Indian Auto, Component Makers Yet To Get Approval For Rare Earth Materials From China

Indian automotive and component manufacturers have yet to get approval from the Chinese government to procure the rare earth magnets, sources told the Times of India (TOI). Sources also said there is “no clarity as yet” on the timeline for the approval or even a meeting with the Chinese authorities, despite the intervention of the Indian government. 

A variety of component manufacturers like Uno Minda, Bosch, Mareli, TVS Group, Motherson Sumi and Soma Comstar have filed the applications for sourcing the magnet from China. These component makers provide automotive manufacturers with key, fully-built components like speedometers, electric motors, e-axles, electric water pumps, speakers, and more. 

Auto Component Manufacturers Association (ACMA) and Society of Indian Automobile Manufacturers (SIAM) are requesting the Chinese officials for a meeting regarding this issue, along with the ministries of heavy industry, external affairs and commerce. Spokespeople from OEMs like Maruti Suzuki, Mahindra & Mahindra, Tata Motors, Bajaj Auto and TVS are also pursuing the matter. 

One of the sources told TOI that the situation of the production of automobiles is grave, and it has led to a situation of big uncertainty about factory output and manufacturing schedules. Ernst & Young has been onboarded as a partner by the Ministry of Heavy Industries (MHI) to work on the issue. MHI also had a meeting with the industry to figure out a way around this crisis. 

The industry also emphasised that their production depends on quick procurement, and also requested the local producers for a firm timeline on supplies, if feasible. ACMA and SIAM have people ready who can go and visit China, if the government can help. 

In April this year, China imposed restrictions on the export permits for medium and heavy rare earth metals, alloys, magnets and other related materials. This was done in a bid to stop the magnets from being used for defence and weapon requirements, and for this, China imposed a new mandate for exports. Exporters would now need a licence to ship the rare earth metals, based on the provision of an End User Certificate (EUC), requiring an approval from the Directorate General of Foreign Trade (DGFT) and the Ministry of External Affairs, while also being endorsed by the Chinese Embassy in India. Once this is done, the EUC needs to be sent to China for approvals, with the first coming from the provincial government of the exporter, followed by China’s Ministry of Commerce. 

Indian automakers are stuck in the queue to get approvals, while manufacturers in Europe have already received their permits for procuring the rare earth materials from China. The USA has already negotiated a special supply agreement with China. Furthermore, the Indian government has also put the export of rare earth materials to Japan on a halt amid this tense situation with China. This is being done to prioritise the usage of these materials for Indian firms.