Outreach to China for Rare Earth Minerals Unsuccessful So Far, Can’t Rule Out Production Pauses: SIAM

SIAM, the Society of Indian Automobile Manufacturers, announced its Q1 FY 2025-26 sales figures yesterday, presenting a sober but optimistic view of the Indian automobile manufacturing industry with all segments apart from three-wheelers declining. Projections for the second quarter are generally positive, with tailwinds coming from the prospect of reduced repo rates, festive season buying patterns, and a favourable monsoon.

However, the ongoing shortage of rare earth minerals, essential in the manufacturing of electric motors and several other car components, remains a major cause of concern for Indian manufacturers. China, the world’s largest processor and exporter of these minerals, has halted supplies globally since early April in protest of tariffs imposed by the US.   

SIAM President Shailesh Chandra confirmed that Chinese government officials have  any applications from Indian importers and manufacturers. “I can only say that importers have reached out to the Ministry of Commerce in China, about 30 applications are still awaiting clearances”, he said. The Government of India has been supporting manufacturers, he added. SIAM hopes the issue will be resolved in the coming days. “Different manufacturers are dealing with it depending on stocks in hand; they are also looking for alternative sources, that's the latest update,” he said.

But is there any immediate danger of interruptions to manufacturers’ operations? Following up on earlier comments from industry players indicating that they had enough stock to continue operations till roughly July, Chandra provided an update: “Various OEMs from all categories have raised concerns about stock depleting but this varies a lot. Some manufacturers are comfortable for the next two months, but definitely, others are facing issues for certain models. This is very OEM-specific. In the short term, for certain OEMs, for certain models, we can’t rule that out.”

In closing, Chandra also provided some insight about how manufacturers have taken this as a lesson for the future. “Discussions with the Government are going on not only in terms of this short-term issue, but also long-term; how we are going to deal with this kind of a situation which can sporadically come up”, he said.