India Eyes Easing EV Rules Amid Rare Earth Supply Delays

The Indian government is considering a temporary relaxation of its 50% localisation requirement for electric vehicle (EV) manufacturers and suppliers, following disruptions in the supply of rare earth materials from China, as per news reports. These materials, particularly magnets, are essential for traction motors used in EVs and hybrid vehicles.

China’s Export Curbs Impact Supply

In April, China imposed restrictions on exports of rare earth magnets, affecting shipments to India. Several Indian original equipment manufacturers (OEMs) have reported shipment delays and, in some cases, outright rejections of export requests. The Ministry of Heavy Industries has advised companies to temporarily import fully built motors or sub-assemblies to bypass the restrictions.

Industry Flags Concerns

Although no formal request has been made, members of the Society of Indian Automobile Manufacturers have reportedly raised concerns during discussions with the government. Companies are exploring alternate supply chains and workaround solutions, but these may be expensive and time-consuming.

The suppliers who invested in local manufacturing of components such as permanent magnet synchronous reluctance motors (PMSRM) are particularly affected. Many are still waiting for benefits under the Production-Linked Incentive (PLI) scheme and now face the risk of losing business to overseas competitors.

Cost Implications

Importing motors is likely to increase costs. Sea freight could add ₹2,000 per unit, while air shipping might raise the cost by as much as ₹5,000 per unit for electric 2-wheelers. These additional charges could affect pricing in a cost-sensitive market.

Read more: India Mulls Halt to Rare Earth Exports to Japan to Boost Domestic Conservation!

Conclusion

The government is reviewing policy measures as supply concerns grow. Talks are ongoing, and Indian manufacturers are waiting for further clarity on the way forward.

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