Auto Inc seeks closer ties with Centre for critical raw materials

It is working on a plan to secure supplies for next two-three quarters

The Indian automobile industry, which is battling rare earth magnet shortage, sought greater government cooperation to secure supplies of critical raw materials.

 

At the same time, several auto companies and component makers are already working on a plan to secure supplies for the next two-three quarters. They are also exploring alternative routes to ensure that production is not hit.

 

Speaking to Business Standard on the sidelines of the annual session of Automotive Component Manufacturers Association of India (ACMA) , the director of a leading two-wheeler major said they have already started testing several models on rare earth magnet-free motors. 

“This would take some time as a large player we have volumes in millions. So testing a tech, getting it approved, securing necessary certifications, and then scaling up production at vendors, takes some time. But, the work is on,” he said.

 

He added that he is hopeful that the talks between Prime Minister Narandra Modi and Chinese President Xi Jinping would help resolve the issue of supplies soon. “As of now, we have secured supplies for the festival season production, and by Q4, we expect that the situation will be smooth,” he said.

 

A large component maker who makes advanced driver-assistance (ADAS) systems, lightings, and other things, said that he found an alternative route to secure rare earths.

 

“We have begun work with several Chinese partners, whereby we are assembling the components in China and then bringing it into India. We are also working on alternative technology and materials apart from rare earths to use in our components,” said a senior executive of the company.

 

ACMA president Shradha Suri Marwah said, “Critical raw materials, availability of rare earth magnets, semiconductors and battery inputs are becoming a strategic issue that requires national focus."

 

Geopolitical volatility, trade wars, tariff escalations and export restrictions are redefining the supply chain, she said.

 

Marwah added that going forward she sees closer government partnerships to secure critical raw materials, deepen international alliances for access to newer markets and strengthen the industry's overall competitiveness.

 

Society of Indian Automobile Manufacturers (Siam) president Shailesh Chandra said that supply chains need to become "agile and diversified" so that they are capable of withstanding disruptions.

 

This means actively working on creating alternative supply chains by partnering resource-rich countries, he added.

 

On rare earths, Chandra said that somehow the industry has managed to weather the crisis.

 

Discussions are now underway to bring the entire rare-earth magnet ecosystem to India.

 

Chandra, who is also the managing director (MD), Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, said that the government needs to support advanced technologies in the automotive sector to reduce dependencies on imports.

 

India needs to not only develop downstream capabilities but also upstream capabilities.

 

Siam has also identified 50 critical components and said the components industry here should start manufacturing these locally to make India self-reliant.

 

Centre preparing incentives to encourage domestic production of rare earths

 

The government is working on fiscal incentives in order to encourage domestic production of rare earth magnets, Union Minister H D Kumaraswamy said on Friday.

 

He said that a scheme is in the works to provide ‘targeted support’ to the industry for capital as well as operational expenditure. This would help bridge cost gaps and also offer relief from high tariffs on some key equipment.

 

In the face of rising global supply chain volatility, India needs to ensure continuity of supply.

 

He added, "The ministry is actively addressing vulnerabilities in critical raw materials. It has recognised that rare earth magnets are central to electric vehicle (EV) motors, currently dominated by Chinese supply. We are preparing fiscal incentives to encourage domestic production. Earlier, he had said that inter-ministerial consultations were underway for a ₹1,345-crore scheme to subsidise production of rare earth magnets in India."