Indian auto industry may face disruption amid China's stricter Rare Earth export controls: Report
New Delhi [India], June 10 (ANI): The Indian automobile industry is expected to face disruptions following China's decision to tighten export controls on rare earth elements (REEs), which are critical in manufacturing chips used in automobiles, according to a report by Emkay Research.
The report mentioned that China, which accounts for over 70 per cent of global REE production and controls more than 90 per cent of refining capacity, imposed stricter export regulations on several REEs from April 2025, citing national security and non-proliferation concerns.
The report said 'The licensing for exports has become significantly longer. These delays have led to supply uncertainty across sectors reliant on these critical inputs'.
It pointed out that electric passenger vehicles (E-PVs) and internal combustion engine passenger vehicles (ICE-PVs) are the most vulnerable within the Indian auto industry.
Electric vehicles (EVs), passenger vehicles (PVs), two-wheelers (2Ws), and commercial vehicles (CVs), in that order, are likely to face the maximum disruption.
High-performance EV motors, teh report said, require heavy rare earth elements (HREEs) such as dysprosium and terbium to maintain efficiency at high operating temperatures.
For electric two-wheelers (E-2Ws), magnets used in motors cost around Rs 150, while in PVs the cost varies from Rs 2,000 to Rs 24,000 depending on the features. However, the issue is not just about cost but the availability of these critical components and the limited options for alternative sourcing.
While ICE 2Ws and 3Ws remain relatively unaffected in the short term, E-2Ws that use permanent magnet synchronous motors (PMSMs) are more vulnerable because of their limited design flexibility.
As per report, while E-2Ws may undergo design changes in a short time (2-3 months), PVs and buses may require 6-12 months for complete motor redesigns due to stricter performance and space requirements.
According to the Society of Indian Automobile Manufacturers (SIAM), ICE-PV production could face cuts starting July 2025, while existing E-2W inventories may last only another 1 to 1.5 months unless alternative sourcing arrangements are made.
Although countries like Brazil and Australia hold substantial REE reserves, with Brazil alone having 20 per cent of global reserves, China continues to exert significant financial and operational control over many of these resources.
Chinese companies also hold stakes in Brazilian mines. In addition, while Vietnam and Malaysia host some refining capacity, they largely lack access to primary raw materials and remain dependent on China.
The tightening of export controls by China is likely to create ripple effects across the global supply chain, with India's auto sector bracing for a challenging period ahead. (ANI)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
7 hours ago
- New Straits Times
India's Maruti Suzuki cuts near-term EV production amid rare earths crisis
NEW DELHI: Maruti Suzuki has cut near-term production targets for its maiden electric vehicle (EV) e-Vitara by two-thirds because of rare earths shortages, a document showed, in the latest sign of disruption to the auto industry from China's export curbs. India's top carmaker, which said on Monday it had not seen any impact yet from the supply crisis, now plans to make about 8,200 e-Vitaras between April and September, versus an original goal of 26,500, according to a company document seen by Reuters. It cited "supply constraints" in rare earth materials that are vital in making magnets and other components across a range of hi-tech industries. Maruti still plans to meet its output target of 67,000 EVs for the year ending March 2026 by ramping up production in subsequent months, the document said. China's curbs on some rare earth exports have rocked the global auto industry, with companies warning of severe supply chain disruptions. While some companies in the United States, Europe and Japan are seeing supplies easing as they secure licences from Beijing, India is still waiting for China's approval amid fears of production stoppages. Launched amid much fanfare at India's car show in January, the e-Vitara is crucial to Maruti's EV push in the country, marking its entry in a segment that Prime Minister Narendra Modi's government wants to grow to 30 per cent of all car sales by 2030 from about 2.5 per cent last year. The setback could also hurt parent Suzuki Motor, for which India is the biggest market by revenue and a global production hub for EVs. The bulk of the made-in-India e-Vitaras are earmarked for export by Suzuki to its major markets like Europe and Japan around summer 2025. Maruti told reporters last week the rare earths issue had no "material impact" on the e-Vitara's launch timeline. Chair RC Bhargava said there was "no impact at the moment" on production, local media reported on Monday. Maruti and Suzuki did not immediately respond to requests for comment on Tuesday. Maruti is yet to open bookings for the e-Vitara, with some analysts warning it is already late to launch EVs in the world's third-largest car market where Tesla is also expected to begin sales this year. Under its previous plan "A", Maruti was to produce 26,512 e-Vitaras between April and September – the first half of the financial year. Under the revised plan "B", it will manufacture 8,221, the document showed, indicating a two-thirds cut in its production schedule. However, in the second half of the financial year – between October and March 2026 – Maruti plans to ramp up production to 58,728 e-Vitaras, or about 440 per day at its peak, versus a previous target of 40,437 for those six months under plan A. Two supply chain sources confirmed Maruti's plan to scale back e-Vitara production because of rare earth magnet shortages but were not privy to the exact numbers. The rare earths crisis comes as Maruti is already grappling to recover market share lost to Tata Motors and Mahindra & Mahindra's feature-rich SUVs. These companies also lead India's EV sales. Maruti's share of India's passenger vehicle market is down to 41 per cent from a recent peak of about 51 per cent in March 2020. Suzuki has trimmed its sales target for India to 2.5 million vehicles by March 2031 from 3 million previously, and scaled back its lineup of EV launches to just four, instead of the six planned before, as competition in the South Asian nation intensifies.
New Straits Times
7 hours ago
- New Straits Times
CIMB: India's duty cut, low stocks seen boosting Malaysian palm oil exports
KUALA LUMPUR: India's recent decision to reduce import duties for palm oil, coupled with low edible oil stocks in the country, is likely to boost Malaysian palm oil exports in May. CIMB Securities Research said the recent correction in the crude palm oil (CPO) price has improved palm price competitiveness against soybean oil. "Palm oil currently trades at a discount of US$128 per tonne against soybean oil. "This, coupled with India's recent decision to halve the import duties on palm oil to 10 per cent with effect from 30 May, will lower the effective duty on palm oil to 16.5 per cent," it said in a note. The firm said this competitive pricing, combined with current low domestic stocks in India, is expected to lead to increased Indian palm oil purchases. Separately, CIMB Securities said the Indonesian government raised the export levy on crude palm oil to 10 per cent, effective from May 17, to raise revenue to fund its biodiesel programme and subsidise replanting. "Following the change, we expect Indonesian palm oil exports to resume in favour of refined palm products. "We project CPO prices to remain within the RM3,700–4,100 per tonne range in June, given rising exports. "Our average CPO price forecast of RM4,200 per tonne for 2025 remains unchanged," it said. Meanwhile, CIMB Securities said Malaysian palm oil stocks are expected to rise one per cent month on month (MoM) to 2 million tonnes in June 2025. The firm said Malaysian palm oil stocks rose seven per cent MoM to 1.99 million tonnes in May 2025, below its estimates but in line with consensus estimates. "The CPO production is projected to be flat owing to fewer working days, while palm oil exports are expected to increase by eight per cent MoM to 1.5 million tonnes," it said. Overall, CIMB Securities has maintained its Neutral rating on the sector, as it expects CPO prices to remain range-bound. "Our preferred pick is IOI Corp Bhd given its lower exposure to Indonesian regulatory risks, its relatively attractive valuations and the positive impact of a stronger ringgit on its US dollar debt obligations. "For investors seeking dividend yield and exposure to smaller-cap palm oil players, our preferred pick is Hap Seng Plantations Bhd owing to its undervalued assets," it added.
The Star
9 hours ago
- The Star
Expanded SST will hit women in sales hard
Costlier haircuts: Hair stylist Joseph Low cutting a customer's hair at his saloon in Puchong. — AZHAR MAHFOF/The Star KLANG: It is a general misconception that anything to do with grooming and beauty-related treatments are unimportant and frivolous. Working mother of two teenagers, Elena Thomas, 47, said looking good was a crucial element for women running their own businesses. 'I run a production house and need to meet clients regularly to make presentations and close deals. It is important for me to look my best when meeting clients to secure business. 'I definitely cannot go out and meet people confidently when I am insecure with the way I look.' Thomas was commenting on the 8% expanded sales and service tax (SST) that will come into force on July 1 to cover beauty-related services and treatments including facials, manicures and pedicures, hair cuts and treatments, slimming treatments, herbal, milk and flower baths, and tattooing. She said the increase in SST will definitely create a new dent in her monthly expenses. 'This is really a very unfortunate turn of events,' said Thomas. Meanwhile, Mary (not her real name), said she believes personal grooming is important for working women. 'As I do sales, I must ensure that I am well-groomed and coiffured when meeting clients. It is not only about my personal image but also my company's reputation,' said Mary, a working mother in her mid-40s. She said she will consider buying several facial care and treatment packages that last a few months, before the SST comes into effect. Wealth planner Mandy Chee, 44, said certain beauty procedures such as facials and waxing were essential for menopausal women as well as those facing hormonal issues. 'When you are going through menopause or after menopause, it is common to have extra facial hair and one way to get rid of this is to go for facial waxing,' said the mother of three. She said most older women will also tend to have very dry hair, and more often than not, suffer from hair loss. Hair treatments are necessary for these women. 'An increase in SST will have a big impact on women who depend on these treatments,' said Chee. Hairstylist and salon owner Roy Lee said he feels bad that his clients will have to bear additional costs of treating or fixing their hair. 'I am going to speak with my products supplier to see if they can continue giving me the 'old price' for at least a few months, as I do not want to immediately raise my price,'' he added. A mandi lulur (scrub bath) practitioner, who only wanted to be known as Shaika, said she currently charges RM159 for one session. 'I do not know what to do or how to incorporate the additional 8% into my charges,' she said. Another sector that is expected to be hit by the expanded SST is the Indian bridal makeup business. Makeup artist S. Premila Devi said sometimes clients will bargain and ask practitioners to not impose the extra charges on them. 'I will absorb the additional cost for personal makeup services that are less than RM300. 'However, I cannot do that for bridal makeup packages that cost RM2,000 and above,'' she said.
