Rare earth shortage bigger problem for auto sector than earlier thought: CII President

The shortage of uncommon earth supplies resulting from China’s export ban of those supplies is a bigger concern for the auto sector in India than was earlier thought, with some firms already indicating they’d be reducing manufacturing, in line with Confederation of Indian Industry (CII) President Rajiv Memani.

One step the federal government can take to alleviate this within the medium time period, he stated, was to promote its stake in some listed public sector firms and use these funds to put money into establishing independence in provide chains for uncommon earths and different crucial components. 

“Definitely auto is a big concern, not only on EVs but wider,” Mr. Memani stated at a press convention on July 3, in response to a query on the uncommon earths difficulty. “In auto, I would say the concern is more serious than what’s come out till now. In fact, some of the most conservative companies have begun to give some guidance on lowering their production levels going forward.” 

China had, on April 4, restricted the export of uncommon earth magnets and associated supplies in retaliation to tariffs imposed by the U.S. on Chinese imports. Rare earth magnets are essential supplies within the motors of electrical automobiles and are utilized in inner combustion engine automobiles as effectively. 

“Personally, I feel it is a good wakeup call for India,” Mr. Memani added. “Not only for rare earths, but for all those areas, whether it is APIs, penicillin or other products, where we have critical supplies coming from outside, we should have a strategy for that. Having such a weakness can impact at critical junctures.” 

The president of the business affiliation additional stated that the federal government presently accounts for 10% of the market capitalisation in India’s inventory markets, which works out to virtually ₹50 lakh crore. A portion of this quantity could be put to a way more productive use, he defined.

Mr. Memani conceded that it will be significant for the federal government to carry shares in strategic or delicate firms, however added that, have been the federal government to promote even 10% of its holdings, it might acquire entry to a considerable sum. “If the government can monetise this and use this to much better effect, either to reduce debt but more importantly to create a sovereign wealth fund that is focussed on MSMEs, focussed on addressing the critical issues the economy is facing, such as rare earths and critical supply independence.”

During his presentation on the key points going through the Indian economic system, Mr. Memani stated that the one greatest issue holding again the personal sector from investing additional within the nation was the dearth of expert labour.

Overall, CII expects the economic system to develop at 6.4-6.7% within the present monetary yr 2025-26.