New Delhi, June 10
As diversification of supply sources is being actively explored, aligned with policy efforts, the situation continues to evolve for the Indian automotive players in their quest to have a steady flow of rare earth magnets amid China’s export restrictions, a Crisil report showed on Tuesday.
Rare earth magnets, low in cost but critical in function, could emerge as a key supply-side risk for the India’s automotive sector if China’s export restrictions and delays in shipment clearances persist.
A disruption lasting beyond a month can impact electric vehicle (EV) launches, affect production and weigh on the sector’s growth momentum, said the Crisil Ratings report.
Recognising the risk, the government and automakers are taking action on two fronts.
In the short term, the focus is on building strategic inventories, tapping alternative suppliers and accelerating domestic assembly under Production Linked Incentive schemes.
For the long term, reducing import dependency will hinge on fast-tracking rare earth exploration, building local production capacity and investing in recycling infrastructure.