Did Shortage Of Rare Earth Magnets Lead To Supply-Chain Trouble For OEMs?

In a written reply in Rajya Sabha, Bhupathiraju Srinivasa Varma, MoS for Heavy Industries, on Friday, December 12, said the dependence of India's automotive sector, especially EVs on rare erath magnets created supply-chain vulnerability for OEMs.

"Government of India is aware of import dependence of the automotive sector, particularly electric & hybrid vehicles, on rare-earth permanent magnets. This dependence has lead to supply-chain vulnerability for OEMs utilizing rare earth magnets, " he said.

To the resolve the issue of import reliance for rare earth magnets, the centre is "exploring alternative supply of rare earth magnets".

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In a move to aid domestic production linked to EVs, the centre had introduced the PLI Scheme for Automobiles and Auto Components (PLI-Auto Scheme) which listed “rare earth magnets for xEV motors” as an Advanced Automotive Technology component and promoted domestic development of (rare earth free) motor tech and components

"In Novemeber, the Union Cabinet had approved the 'Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets' with a financial outlay of Rs 7,280 crore to establish 6,000 Metric Tons per Annum (MTPA) of integrated Rare Earth Permanent Magnet (REPM) manufacturing in India," Bhupathiraju Srinivasa Varma said.

This comes after China, which is credited for processesing about 90% of global output, tightened export controls in April after its trade war with the US, disrupting supplies for automotive manufacturers globally.

On the other hand, India is also pushing for a transition to ethanol, a bio fuel that can produced from sugarcane among other raw materials, and led to savings of over Rs 1.40 lakh crore of foreign exchange, according to Union Road Transport Minister Nitin Gadkari.