India must work with China on EV tech for 5-10 years: Uno Minda chair

India should collaborate with China for the next five to 10 years on electric vehicle (EV) technologies, given Beijing’s lead in the field, as long as it does not come at the cost of national security or sovereignty, said Nirmal Kumar Minda, executive chairman of auto component maker Uno Minda. 

“De-risking from China isn’t easy. Around 40 per cent of vehicles made there are electric. They are the world leaders now. We should work with China, not by compromising national security, but by creating a win-win situation,” Minda told Business Standard in an interview. 

Since April this year, China has restricted the export of rare-earth permanent magnets (REPMs) to India, hitting production in the domestic automobile industry. REPMs are essential for traction motors used in electric vehicles, and nearly 90 per cent of global production takes place in China. The country also dominates in rare-earth mining and in the machinery required to convert rare-earth oxides into magnets. 

 

Minda said the government and industry must collaborate to find long-term solutions through local research and development (R&D), but short-term cooperation with China is unavoidable. “For the short term, we need to work with them. They have next-generation technology and are cost-effective in areas like batteries, powertrains and ADAS (advanced driver assistance systems),” he said. 

“We should work with China for the next five to 10 years and, in that time, become self-reliant, just like they have,” he added.

For Indian auto component makers, China is the largest import market and the US the biggest export destination. While China has restricted REPM supplies, the US has recently imposed tariffs of 25-50 per cent on auto parts sourced from India. 

For Uno Minda, exports to the US account for just 1-1.5 per cent of revenue. 

“I don’t see a major impact from these tariffs. Our customers take 12-18 months to develop and validate components with suppliers like us. It’s a complex process because every auto part communicates with others through software. If there is any effect, it will be visible only a year or more later,” Minda said. 

He urged both the governments to resolve the issue diplomatically. “India and the US should sit together and find a solution — but not at the cost of national security,” he added. 

None of Uno Minda’s US customers have indicated plans to shift sourcing. “Perhaps they are also hopeful of a resolution,” he said. 

On February 17, Uno Minda announced a joint venture with Suzhou Inovance Automotive, a Chinese electric drive systems manufacturer, to produce high-voltage EV powertrain components in India. Uno Minda holds a 70 per cent stake in the venture, which will make e-axles, motors, inverters, and charging units for passenger and commercial vehicles. 

Minda said that Uno Minda enters collaborations or acquisitions only when they bring new technology that can be developed cost-effectively in India. “Acquisitions shouldn’t be for the sake of topline growth. If we get new technology that we can make in India at a lower cost, then M&As make sense,” he said. 

“Whenever there’s new technology, we ask if we can develop it ourselves. If not, we go for technical licensing. If that doesn’t work, we look at a joint venture. M&A is the last option because cultural integration is always a challenge,” he noted. 

Currently, about 89 per cent of Uno Minda’s revenue comes from the domestic market and 11 per cent from exports. 

“This mix will change. With more FTAs being signed, we aspire to increase exports to about 20 per cent of total revenue in the next five to six years,” Minda said.