How China’s Magnet Restrictions Are Hindering India’s EV Growth and Sparking Supply Chain Concerns

India’s Electric Vehicle Challenge: The Rare Earth Magnet Dilemma

India’s push for electric vehicles (EVs) is facing a crucial challenge: the supply of rare earth magnets. These magnets are vital for the motors that power most EVs, especially two-wheelers. Unfortunately, with China tightening its grip on exports, Indian car makers are feeling the heat.

Since April 2023, China has imposed restrictions on rare earth magnets, partly in response to previous tariff changes. Currently, India relies on China for about 90% of its magnet imports. This dependency creates a risk of major disruptions in manufacturing. Experts warn that if the supply issues continue, the cost of EVs could rise, and production may slow down significantly.

Pankaj Chadha, Chairman of the Engineering Export Promotion Council of India, highlighted the ongoing discussions among industry leaders. However, no solid solutions have emerged yet. He pointed out that China seems more interested in selling finished motors rather than the raw materials needed for manufacturing, suggesting a desire to limit India’s growth in this sector.

The challenge doesn’t stop there. New sources, like Vietnam and Australia, could provide alternatives, but they currently lack the capacity to meet India’s needs. Further, testing these options could take years, delaying progress even more.

Since the export restrictions began, shipments of magnets have been stuck at Chinese ports. Indian manufacturers now face stringent requirements, from self-declaring the end-use of magnets to obtaining multiple certifications. Although some applications have cleared the Indian side, Chinese approvals are still pending, leaving manufacturers in limbo.

This issue is especially concerning for the two-wheeler market, where price sensitivity is high. Delays could lead to production setbacks and potential price hikes of up to 8%, as companies scramble to cover rising costs.

Despite these hurdles, there is a silver lining. Ajay Sahai, Director General of the Federation of Indian Export Organisations, has shown optimism about creating alternative supply chains. He stressed that India’s reliance on a single country is risky and emphasized the need to diversify.

The situation is not just a logistical challenge but a call for India to reassess its manufacturing landscape. For India to thrive in electric mobility, it must look beyond one country and establish a robust supply network. By doing so, the nation can safeguard its economic progress against unpredictable geopolitical tensions.

As the world shifts towards electric vehicles, the stakes for India are high. The steps taken today will shape the future of its automotive sector and its standing in the global market.

Source link

CHINA RESTRICTS RARE EARTH MAGNET, CHINA INDIA RARE EARTH, INDIAN EV, EV MANUFACTURING, CHINA RARE EARTH MAGNET, CHINA’S MAGNET CURBS STALL COUNTRY'S EV MOMENTUM, TRIGGER SUPPLY CHAIN ALARM