Automakers Brace for PLI Benefits Hit as RE Magnet Curbs Continue

Even as India and China have signaled a relaxation in ties, Beijing continues its stranglehold over exports of rare earth (RE) magnets, with applications made by Indian automakers to source the key minerals from that country continuing to hang fire.

- RAVI DUTTA MISHRA & SOUMYARENDRA BARIK

This has forced them to procure entirely built motor parts and components from China and Vietnam, which could adversely impact automobile prices and end up reducing the manufacturers' domestic value addition percentages.

"None of the Indian automobile companies are receiving rare earth magnets from their suppliers in China. Instead of fitting the magnets in India, Indian companies are forced to source entire components from China and Vietnam, which is more expensive. Several such stopgap arrangements are being figured out by the automobile industry. There was an expectation that after the SCO summit, the supply would be restarted, but that has not materialized on the ground. Producing rare earth magnets in India will take 3-4 years, and it cannot happen immediately. There are several parts of the supply chain. India has some of it, but not the entire process to produce rare earth magnets," a source said.