Indian Auto Industry Faces Potential Major Damage According to Rakesh Sharma
In a recent statement, Rakesh Sharma, Executive Director of Bajaj Auto, has raised concerns about the potential impact of a rare earth magnet shortage on the company's July manufacturing plans. The Indian auto industry, primarily reliant on Chinese suppliers for these crucial components, is facing a critical situation due to the complex import procedures and geopolitical tensions.
The shortage of rare earth magnets, a key component in the electric motor of an EV, is affecting the entire sector, not just Bajaj Auto. The supply crunch threatens the growing electric vehicle market segment in India, a sector where Bajaj Auto has made significant strides in both two-wheelers and three-wheelers.
The process of importing these magnets from China involves numerous certifications and declarations, including assurances that the materials won't be used for military purposes. The approval process is a lengthy one, involving approvals from several Indian government departments, the Chinese embassy, and Beijing's final export authorisation.
Currently, there are over 30 import requests from the auto sector, but none have received approval yet. The approval process, which Chinese officials indicate takes 40-45 days, has not been completed for any application so far. As a result, current inventory levels of rare earth magnets are dropping rapidly across the Indian automotive industry, threatening production schedules.
The Indian auto industry does not have immediate alternatives to the rare earth magnets supplied by China. Setting up extraction and processing facilities in India or elsewhere requires substantial time and capital investment. Switching to alternative materials for rare earth magnets presents its own challenges, as replacement components need extensive testing and validation.
Despite the challenges, Rakesh Sharma remains cautiously optimistic. He believes that either current approval channels will open up or alternative solutions will emerge throughout the year. If the potential issue with rare earth magnet supply is resolved, Bajaj Auto and other EV players should not feel the heat as much.
The authority responsible for the approval of imports of rare earth magnets from China to India is linked to the Bureau of Indian Standards (BIS), which has expanded its regulatory requirements and certification obligations for various machinery and mechanical devices, including relevant imports. Importers must comply with BIS certification requirements enforced by Indian regulatory authorities.
The geopolitical situation regarding rare earth magnet supply is a concern for the Indian auto industry. The industry is hoping for a resolution to this issue soon, as the consequences of a prolonged shortage could be far-reaching and long-lasting.
