Auto cos seek duty, local content relief for Chinese motors

Automakers looking to import fully made motors to skirt China's export ban on rare earth magnets have called for lower import duties and easier local content requirements.

- Ayaan Kartik

Passing on the duty burden on imported motors will raise vehicle prices, and manufacturers will miss out on production incentives with strict local content rules, the Society of Indian Automobile Manufacturers (Siam) wrote to the government. Production could come to a complete halt for several models if the motors aren't available.

"In the current scenario when there is a restriction on import of standalone magnets, full assembly/allied components/sub-assemblies will have to be imported which shall attract a basic customs duty (BCD) of 15% leading to increase in cost of the vehicles," the lobby of automakers wrote to the heavy industries ministry on 27 June. Mint has seen a copy of the letter.

Electric vehicles are powered by traction motors connected to a battery, while sensors, telemetry and other electronic functions of all vehicles use rare earth magnets. India's automakers have so far failed to meet Chinese officials to quicken the approval process, highlighting the external dependence for these critical items, as well as the vulnerability of global supply chains.