New Delhi [India], June 12 : Rare-earth magnet inventories are likely to 'taper off' by mid-July 2025 for the automobile industry, weighed down by the export restrictions from China and ensuing shipment delays, according to a release by rating agency ICRA.
"With China tightening export controls and delaying shipment clearances, rare earth magnet inventories are projected to last only until mid-July 2025 for several, if not all, passenger vehicle and two-wheeler applications," Jitin Makkar, Senior Vice President and Group Head - Corporate Ratings, ICRA Limited.
The Industry is looking for contingency options and alternative supply chains, but it is riddled with difficulties.
"While the automobile industry is exploring a range of contingency options, each of these appears ridden with logistical, regulatory, and engineering complexities, exacerbating the prevailing uncertainty," the rating agency said.
"India imported around USD 200 million worth of these magnets for both automotive and non-automotive applications, with approximately 85% of this sourced from China. While the trade value may appear modest, the strategic dependence it reflects is anything but the supply uncertainty has cast a shadow on production planning. The dependence on China for these specialised materials could upend the automobile sector, particularly the fast-growing electric vehicle segment, if the concern remains unresolved." Makkar added.
In order to deal with this risk, India is exploring various options such as importing fully assembled motors from China, or shipping the rotors, on which the rare earth magnets are mounted, to China for magnet assembly and then re-importing the assembled rotors.
Additionally, substituting rare earth magnets with alternatively engineered materials or introducing rare earth magnet-free motors could also be seen as alternative options.
However, a Maruti Suzuki spokesperson on Thursday said, "Regarding the situation on rare earth, as of now, there is no disruption in our operation due to this issue. There is a lot of uncertainty and the situation is continuously evolving."
Maruti Suzuki added, "We are monitoring the situation and pursuing multiple solutions to ensure continuity in our operations. If and when there is any material impact to our business, we will inform all stakeholders in line with regulatory requirements."
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor