Automaker Mahindra & Mahindra and component manufacturer Uno Minda are exploring the prospects of local production of rare earth magnets to reduce dependence on China, according to company and government sources cited by Reuters.
Currently, China accounts for about 90% of global rare earth magnet output, and it imposed export restrictions in April. While some shipments to the United States and Europe have resumed, Indian companies are still awaiting approvals from Beijing.
The recent disruption has caused the nation to explore and start building stockpiles of magnets, and has persuaded the government to offer incentives to support domestic production of these components. These rare earth magnets are essential for the manufacturing of electric vehicles and electronics.
Decisions Pending
In a meeting held in June with the Ministry of Heavy Industries, Mahindra expressed interest in forging a partnership with another firm for magnet production or entering into a long-term supply contract with a local producer, as reported by ET Auto. Since Mahindra is an EV manufacturer as well, it has its own requirements for EV magnets. The brand has recently launched two new EVs and plans to further invest in launching more electric vehicles.
Indian industries expressed strong interest in the manufacturing of magnets to aid EV production during the meeting. Sona Comstar, a supplier of gears and motors to automakers including Ford and Stellantis, was the first Indian firm to indicate interest in domestic magnet production. Beyond Sona Comstar, Uno Minda also expressed interest in manufacturing magnets at the same meeting, said two sources. The decision of these manufacturers on potential investment will depend on government incentives and the availability of raw materials.
Mining Seen As A Bottleneck
India holds the fifth-largest reserves of rare earth minerals, but mining them remains a challenge. The government controls rare earth mining through Indian Rare Earths Limited, which produced around 2,900 tonnes of rare earth ores in 2024. Most of this output is used by defence and atomic energy units, with some also exported to Japan.
IREL has been planning to cease exports and expand mining and processing within the country. JSW has also shown interest in mining rare earth minerals in India. However, sources have revealed that magnet production could take several years to commence. The government is planning to partner with five Central Asian nations to explore joint mining projects for critical minerals.
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