Car Manufacturing Could Grind To A Halt In India Owing To China’s Magnet Export Restrictions: Report

Manufacturing of motor vehicles in India could come to a halt in the coming days due to restrictions placed by China on the exports of rare earth magnets. The country, which is currently responsible for the supply of 90 per cent of neodymium magnets globally, had introduced new rules in April that required companies to have import permits for the required material. According to a report from Reuters, while the government has started providing approvals, select automotive executives worry that strained relations between India and China might affect approvals. The Indian automotive industry, which is currently the third largest market in the world, currently largely relies on Chinese markets to source neodymium magnets.

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For the unversed, neodymium magnets are among key components used in automobiles around the world. Primarily used in electric motors for EVs, the material can also be found in multimedia systems, the electronic control unit, safety systems and energy transmission systems in a car. While relatively inexpensive to import, delays in the process could cause entire production lines to stop manufacturing due to their vitality. Shipments to India have reportedly been stuck at Chinese ports since April 4.

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In its report, Reuters also points out that inventories at auto part makers are expected to run out by the end of May, which was revealed in a meeting attended by several of India’s biggest manufacturers. The companies also expressed worries about the complexity of the process, which requires approvals from Indian ministries and the Chinese Embassy and appears to be far too time consuming. The new laws have reportedly caused the Chinese export of permanent magnets to fall by 51 per cent. The Indian auto industry had exported 460 tons of rare earth magnets, mostly from China last fiscal year and is expected to import 700 tons worth $30 million this year.