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India’s largest automaker, Maruti Suzuki, stated on Monday that China’s new export restrictions on rare earth magnets have not immediately affected its production operations, though the company acknowledged ongoing discussions with government officials about the developing situation.
According to Reuters, automotive industry manufacturers warned government officials last week that production lines could come to a standstill within days due to the Chinese export curbs. The new restrictions have created significant anxiety among manufacturers due to the complexity of revised import procedures.
The updated process now requires approval from both Indian and Chinese authorities, along with extensive documentation including end-use certificates that specifically state the magnets will not be used for military applications. This bureaucratic complexity has raised concerns about potential supply chain bottlenecks.
When pressed about how many weeks of inventory the company maintains before production would be significantly impacted, Maruti Suzuki declined to provide specific timelines. Rahul Bharti, the company’s senior executive director for corporate affairs, explained to reporters that the company has already submitted an import application and would find it challenging to offer detailed projections until receiving an official response.
“It is not a restriction. It is an endorsement of end use. In case there is an issue, we will inform all our stakeholders, including the stock exchange,” Bharti stated during the media briefing.
Despite public reassurances, Reuters reported that during a private industry meeting with India’s heavy industries ministry last week, Maruti Suzuki indicated it might be compelled to halt production of one specific car model in early June if the magnet supply issue remains unresolved. This information came from two sources with direct knowledge of the discussions.
China maintains control over more than 90% of global processing capacity for rare earth magnets, which are essential components across multiple industries including automobiles, home appliances, and clean energy sectors. The country implemented new measures in April that require companies to obtain specific import permits before proceeding with purchases.
The Society of Indian Automobile Manufacturers has communicated to Prime Minister Modi’s administration that component suppliers’ inventories may be depleted by the end of May. The organization warned that beginning in early June, automotive industry production across India could come to a “grinding halt.”
India’s heavy industries minister, HD Kumaraswamy, announced separately on Monday that the government is preparing to dispatch a delegation of industry executives to China within the next 2-3 weeks. This diplomatic mission aims to engage directly with Chinese authorities to address and resolve the supply chain concerns.
The supply chain challenges emerge at a particularly sensitive time as automakers are preparing to introduce new electric vehicles in the Indian market, partly in response to declining sales of traditional gasoline-powered models.
Maruti Suzuki, which has plans to launch its inaugural electric vehicle in India this year—an electric SUV called the e Vitara—does not anticipate any “material impact” on the vehicle’s launch schedule due to the current magnet supply situation, according to Bharti’s statement to the media.
This article first appeared on Autocar
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