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With China curbing exports of rare earth magnets to India, India’s auto component industry is looking for alternatives. The government is encouraging auto parts makers to work with start-ups that can process rare earth minerals, says Shradha Suri Marwah , president of the Automotive Component Manufacturers Association of India (ACMA).
“There will be some support from the government. And we will come up with a solution. The government is encouraging us to work with start-ups that have this processing technology. There will be various tie-ups that will happen,” Marwah told Fortune India.
India imports roughly ₹300 crore worth of rare earth magnets from China annually. While India has the raw materials to produce magnets, it lacks the processing technology, making the country dependent on imports from China. Beijing, which announced curbs on exports of rare earths in April, has yet to lift these restrictions.
“It’s a low-cost item but an important item, as a car is a sum of all the parts,” said Marwah. “There are about 72 different parts that need these magnets,” she adds.
“There are various solutions that are being looked at right now. OEMs are looking at alternate technologies to work it out,” said Marwah. “In the long term, the writing is on the wall. We have to be fully self-reliant. In the short term, it is concerning because with the imports being zero, we will stock out at some point,” explained Marwah.
Battery recycling startup Lohum plans to start processing of rare earth minerals to produce magnets by 2027.
In light of the magnet crisis, the auto industry is seeking easier domestic value addition norms to comply with the Auto PLI scheme, which mandates 50% localisation.
The turnover of India’s automotive component industry stood at ₹6.73 lakh crore, registering a year-on-year growth of 9.6%. The industry grew at a CAGR of 14% from FY20 to FY25, nearly doubling in size over the past five-year period.
Sharing insights on the performance of the auto component industry, Marwah, said, “The Indian auto component sector continues to be a cornerstone of the country’s manufacturing prowess. FY25 was yet another milestone year where the industry’s growth was underpinned by strong domestic demand, rising exports, and increasing value addition. As India transitions towards new-age mobility, our industry is making the necessary strides in investments, technology and localisation to serve both domestic and global markets effectively.”
“The fiscal year witnessed broad-based growth and recovery across segments. While two-wheelers demonstrated robust growth, the passenger vehicle and commercial vehicle segments experienced steady, albeit moderate, momentum. On the exports front, ongoing geopolitical challenges have led to supply-chain challenges,” she added.
“Investments in higher value-addition, technology upgradation, and localisation are being accelerated to align with evolving customer expectations and global supply chain dynamics,” said Marwah.
Auto component supplies to OEMs stood at ₹5.70 lakh crore, registering a growth of 10% year-on-year, driven by an 8% increase in overall vehicle production in the country. Consumption of increased value-added components and shift in market preference towards larger and more-powerful vehicles continued to contribute to the turnover of the auto-components sector.
Exports of auto components grew by 8% to ₹1.92 lakh crore in FY25 from ₹1.75 lakh crore in FY24. North America accounting for 32% of exports saw an increase of 8.4%; while Europe accounting for 29.5% witnessed a decline of 2.1%. Asia accounting for 26% witnessed 15.1% growth. Top export categories included drive transmission & steering, engine components, suspension, braking, and body or chassis parts.
Imports stood at ₹1.88 lakh crore, growing 7.3%, with China accounting for a third of the total.
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