The Indian auto part business has “no visibility” on when will probably be in a position to resume imports of uncommon earth magnets from China, business representatives stated on Tuesday. The business, which grew by 9.6 per cent to $80.2 billion in 2024-25, can also be going through different geopolitical headwinds, resembling potential US tariffs and provide chain disruptions brought on by conflicts within the Center East, they added.
“We’re going through challenges on the entrance of uncommon earth magnets from China. Once more, there isn’t a visibility right here as to after we’ll be capable to resolve this problem,” Vinnie Mehta, director normal of the Automotive Part Producers Affiliation (ACMA) of India, stated at a press convention.
Since April, China has blocked the export of uncommon earth magnets, key elements in traction motors for electrical automobiles (EVs), to markets around the globe, together with India.
On whether or not the business is going through shortages, Mehta stated, “No person has formally come and informed us. However sure, we do perceive that since April there was no import of uncommon earth magnets and the scenario can final so long as they’ve the inventories. And once more, the inventories aren’t infinite.”
Shradha Suri Marwah, president of ACMA and chairperson and managing director of Subros Ltd, stated the difficulty wants a government-to-government intervention for a decision within the near-term. “We now have began work on alternate options. We’re additionally very clear that in the long term, we can have a everlasting resolution to this as a result of India has the uncooked materials. We simply want the processing expertise,” Suri added.
In FY25, India’s auto part sector grew by 9.6 per cent to $80.2 billion from $74.1 billion in FY24. The sector has additionally recorded a compound annual progress charge (CAGR) of 14 per cent since FY20, when it was sized at $49.3 billion.
Exports grew by 8 per cent to $22.9 billion, whereas imports grew by 7.3 per cent to $22.4 billion within the final monetary 12 months. Each exports and imports hit a five-year excessive, in comparison with $13.3 billion and $13.8 billion, respectively, in FY21.
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The US remained India’s prime auto part export vacation spot in FY25, accounting for 27 per cent, adopted by Germany (7 per cent) and Thailand (4 per cent). On the import facet, China led with a 32 per cent share, trailed by Germany (11 per cent) and Japan (10 per cent).
FY26 business outlook
In its outlook for the continuing monetary 12 months, ACMA recognized geopolitical challenges and rising freight prices as key headwinds. “Geopolitics right now may be very disruptive. We don’t know when and the place battle will strike. It’s a dominating sentiment. Tariffs are unstable. With respect to the US, yesterday some (tariffs) have been introduced, which cowl some nations. Our nation’s identify wasn’t there, however however,” Suri stated.
With the US being India’s largest auto components export market, any new tariffs might dent demand and damage home exporters. President Donald Trump on Monday stated the US is “near signing a commerce deal” with India, after asserting new reciprocal tariffs on 14 nations — together with Bangladesh, Malaysia, Japan, Cambodia and South Korea — setting charges at 25 to 40 per cent.
Suri additionally stated maritime commerce disruptions are inflicting longer lead occasions and tying up money flows. “Whether or not it’s on the Pink Sea facet or the Singapore port, and now with the Iran problem, routes are being redone. For instance, what was earlier taking 10 days is now taking 22 days… Localisation is growing and dependence on world commerce goes down for everybody within the worth chain. Over the subsequent 3-4 years, it might not be that impactful. However for the time being, it’s paining (the business),” she stated.
