No visibility on magnet imports, may stock out in next 2 months: ACMA President

Marwah observed that India will have to start processing the rare earth magnets domestically.

Amid China's export restrictions on rare earth elements and finished magnets, the stocks of Indian original equipment manufacturers (OEMs) might run dry in the next two months, according to Automotive Component Manufacturers Association of India (ACMA) President Shradha Suri Marwah.

China, which dominates the rare earth magnet supply chain with 70% of the total mining and almost 90% processing, imposed export curbs on seven rare earth elements, including Terbium, Scandium, Samarium, Dysprosium, Yttrium, Gadolinium and Lutetium, and finished magnets, including Neodymium-Iron-Boron (NdFeB), in April. The move was Beijing's retaliation to U.S. tariffs. The fresh guidelines require end-use certification to ensure their non-military use.

Rare earth magnets form an integral part of traction motors like permanent magnet synchronous motors (PMSMs), which are employed by electric vehicles (EVs) due to their efficiency, high and smooth torque, and longer lifespan.

Besides, EV, hybrid and internal combustion engine (ICE) models require rare earth magnets in heating, ventilation and air conditioning (HVAC) units, electric power steering (EPS), regenerative braking, electronic sensors and audio components, among others.

"There's no visibility (on magnet imports) right now. It is a government-to-government issue that has been handled. No imports have been happening since early April," Marwah told Moneycontrol.

"What we hear is that there may be a situation where we may stock out in the next two months. Having said that, we are not seeing any change in plans at the original equipment manufacturers yet," she added.

The Indian government is currently engaged with Beijing to ensure that the export curbs are lifted and the import of rare earth magnets resumes. Automotive industry bodies like ACMA and Society of Indian Automobile Manufacturers (SIAM) are also part of the engagement process.

When asked about alternatives being contemplated, Marwah said: "The component industry is working on various fronts. One would be long-term solutions, such as seeing how we can start manufacturing them in India, as India does have the raw materials. But currently, in the short term, it is a bit challenging."

"China processes 90% of the rare earths. It is not only that we are dependent on them, but everyone is dependent on them. But one thing that is happening with all this disruption is that every nation, including India, is making its own plan," she noted.

Marwah observed that India is looking to chart an 18-month to two-year plan to start processing the rare earth magnets domestically. "That is what is being considered because what we need is process technology. We do not have an option. We will have to do it," she said.

The turnover of the automotive component industry stood at Rs 6.73 lakh crore in FY25, registering a jump of 9.6% (year-on-year). The industry grew at a CAGR of 14% from FY20 to FY25, nearly doubling in size over the past five-year period.

"If you look at data over the last 10 years, the level of localisation has gone up. We are making more and more in India. Yes, one country does dominate in terms of imports in certain parts, but the way the localisation plans are being rolled out, it will be a very different situation five to seven years from now," Marwah said.