The auto parts industry in India is increasingly becoming uncertain as China continues to tighten its control on exports of rare earth magnets. According to the Economic Times (ET), the amount of Indian firms seeking import licenses in Beijing has doubled within two weeks.
By the middle of June, 21 Indian firms had registered with the China commerce ministry to be granted licenses to import medium and heavy rare earth magnets, compared with 11. It came after a directive by China on April 4, which stated that exporters were to get official clearance, which should include an end-user certificate stating that the materials were not to be used in the manufacture of weapons.
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Some of the companies who have filed are Bosch India, Marelli Powertrain India, Mahle Electric Drives India, TVS Motor and Uno Minda. An ET report says that Sona Comstar, which was previously rejected, has re-applied and is waiting to be cleared.
According to the Society of Indian Automobile Manufacturers (SIAM), 52 Indian firms at least use Chinese magnets as parts. Others have already done the paper work and received their end-user certificates but they are yet to be given the necessary export licenses by China.
Developments are slow, and ET sources said the work is done through diplomacy.
On the contrary, some European companies and the US have raced ahead. The Chinese directive was an action on the US tariffs under the Trump administration, but Washington has already arranged for the supply of rare earth magnets. Auto companies in Europe have been cleared, but those in India are still hung up.
Industry players fear that the approval of licensed production would affect production. The executive told ET that there is nearly no value measured against the size of the industry and that vehicles cannot be made even if we lack a single part.
In 2024 25, India imported 870 tonnes of rare earth magnets at Rs 306 crore, and the companies have warned that the current inventories might not last longer than early July.
