Shortage of Rare Earth Magnets Poses Significant Challenge for Indian Auto Sector: CII

The Confederation of Indian Industry (CII) has warned that the shortage of rare earth magnets, caused by restrictions on exports from China, has become a more pressing issue for India’s automobile sector than in previous years. These magnets, essential for manufacturing electric vehicles and other advanced automotive components, are now in limited supply, potentially affecting production and innovation in the industry.

 

CII President R. Dinesh stated that the government, in collaboration with industry stakeholders, needs to take urgent steps to address the problem. He highlighted that rare earth magnets are vital not only for electric vehicles but also for several high-tech applications, making their shortage a matter of strategic concern.

 

The scarcity has been attributed to China’s tighter control over rare earth exports, coupled with rising global demand. Analysts note that the Indian auto industry, which is already under pressure to meet green mobility targets, could face production slowdowns unless alternative supply chains are developed.

 

Meanwhile, the World Bank has projected India’s economic growth rate to remain between 6.4% and 6.7% in the current fiscal year, reflecting steady domestic demand and investment. However, industry leaders caution that critical component shortages could undermine the country’s growth potential in sectors like manufacturing and electric mobility.

 

The government is reportedly exploring options to boost domestic production of rare earth materials and diversify import sources. Policy measures under consideration include incentivizing local mining, establishing strategic reserves, and forging international supply partnerships.