China rare earth curbs: Indian automakers strained as magnet exports yet to resume; festive season output fears grow

More than two weeks after Beijing announced easing restrictions on rare earth exports, supplies of critical magnets from China are yet to resume, leaving Indian automakers and component suppliers struggling to manage the shortfall on a day-to-day basis.

Industry executives expressed concern that while high-level talks are underway between the two countries, the situation on the ground remains unchanged, reported ET.“There is an intent, but there has been no change on the ground and magnet supply has not resumed,” Shenu Agarwal, MD & CEO of Ashok Leyland, was quoted as saying by ET on the sidelines of the annual convention of the Society of Indian Automobile Manufacturers. A senior executive at a leading global component supplier confirmed that shipments remain stalled, though approvals may come within a month.

TVS Motor Co. is also under strain, with director and CEO K N Radhakrishnan saying, “We are managing the magnet shortage on a day-to-day basis, which means it is challenging.”Magnets made with rare earth elements are essential for electric motors used in passenger cars, two-wheelers, and commercial vehicles. The disruption has raised fears of potential production bottlenecks during the festive season demand upcycle.

However, leading carmakers including Maruti Suzuki, Tata Motors, and Mahindra & Mahindra have not faced disruptions so far, as per ET. Mahindra, for instance, has enough stock to last until the December quarter, while others are exploring ways to tweak magnet composition.Industry observers caution that the episode highlights India’s heavy reliance on Chinese supplies. Globally, Beijing accounts for over 80% of rare earth magnet exports. As per news agency PTI, the ministry of mines has been working on measures to ensure supply chain resilience for critical minerals. India has entered into bilateral agreements with resource-rich countries such as Australia, Argentina, Zambia, and Peru, while Khanij Bidesh India Limited (KABIL) is tasked with acquiring overseas mineral assets of strategic importance.Despite these efforts, industry executives privately admit that building reliable non-Chinese supply chains will take years. For now, automakers are in wait-and-watch mode, stretching existing inventories to keep production lines running. “So far production has not been disrupted. But unless supplies resume soon, it will remain a balancing act,” a senior industry executive said, as per ET.