Maruti Suzuki, India’s largest passenger car manufacturer, has assured that China’s recent export restrictions on rare earth magnets will not have an immediate impact on its production operations. While concerns have risen in the broader electric vehicle (EV) ecosystem, Maruti has clarified that it is engaging with the government and other industry stakeholders to assess the longer-term implications.

The restrictions, imposed by China on the export of rare earth materials, are being widely viewed as a retaliatory measure against the US tariffs that took effect in April 2024. The Indian auto sector, particularly EV manufacturers, have expressed concerns about a potential disruption to their component supply chains, as China remains a dominant supplier of rare earth magnets used in EV motors, steering systems, and various electronics.

Maruti Suzuki's Position

Speaking at an industry forum, Rahul Bharti, Executive Officer of Corporate Affairs at Maruti Suzuki India, said:

“There is no immediate impact on our operations due to China’s restrictions. We are watching the situation closely and are in constant dialogue with the government, which has been receptive and supportive.”

He noted that deliberations are ongoing across the industry to explore alternate sourcing regions for rare earth magnets and to understand the availability and scalability of those options.

When asked directly about sourcing from other countries, Bharti responded:

“That's a larger question that will need more deliberation and more studies. Where are other sources available?”

This statement underlines the complexity of the global rare earth supply chain, which is currently heavily concentrated in China.

Background of the Magnet Curb

Rare earth magnets, particularly neodymium-iron-boron (NdFeB) magnets, are critical components in electric vehicles, wind turbines, medical devices, and defence technologies. China accounts for over 85 percent of global production and over 90 percent of processing capacity.

In early April, the United States imposed fresh tariffs on a wide range of Chinese goods as part of its strategy to counter Chinese industrial overcapacity. China, in turn, announced export licence requirements and tightened oversight over rare earth materials.

These developments have triggered concerns across multiple industries, including the automotive sector, which is undergoing a rapid transition to electrification and increasingly reliant on magnet-based motors.

India's EV Sector and Supply Risk

While Maruti Suzuki does not yet have a full EV in its portfolio, the company plans to launch its first electric vehicle by 2025 and is expected to scale production over the next few years. For now, its mild hybrid and internal combustion engine (ICE) models dominate its lineup, making it less exposed to rare earth magnet shortages in the short term.

In contrast, companies with a heavier EV focus, including Tata Motors, Mahindra Electric, Ola Electric, and several two-wheeler manufacturers, could be more vulnerable if supply disruptions occur. These players typically rely on permanent magnet synchronous motors (PMSMs), which require large quantities of rare earth materials.

Despite the current comfort, Maruti and others recognise the need for long-term resilience, especially as electrification progresses and component dependencies evolve.

Government Engagement

According to Bharti, the Government of India has been actively engaged in assessing the potential impact and working with industry leaders. Ministries such as Commerce, Heavy Industries, and Electronics and IT (MeitY) are involved in strategic discussions aimed at:

• Mapping critical dependencies

• Identifying alternate global suppliers

• Incentivising domestic research and innovation in magnet technology

• Supporting recycling and extraction of rare earths from electronic waste

India has domestic reserves of some rare earth elements, particularly in Andhra Pradesh, Jharkhand, and Tamil Nadu, but lacks the processing and refining infrastructure to scale up quickly.

In this context, the government’s Production Linked Incentive (PLI) schemes for advanced chemistry cells (ACC) and auto components may be revamped to incorporate rare earth value chain support.

Alternative Sources and Challenges

While regions such as Australia, Canada, the US, and Vietnam are being discussed as potential alternate sources, the shift is not immediate. Challenges include:

• Limited refining and separation capacity outside China

• Long-term contracts and pricing volatility

• Geopolitical instability in mining zones

• Logistical and transportation hurdles

Hence, industry players like Maruti Suzuki are adopting a wait-and-watch approach, focusing on risk mapping, inventory management, and policy collaboration rather than instant supply replacement.

Industry-Wide Collaboration

The auto industry is also discussing the potential for joint ventures or consortium models to pool demand and negotiate bulk purchases from alternative suppliers. This approach could help mitigate risks and drive price stability across the sector.

Experts also highlight the need for R&D investments in magnet-free motor technologies, such as induction motors or switched reluctance motors, which reduce dependency on rare earths.

Conclusion

For now, Maruti Suzuki has confirmed that its supply chain remains unaffected by China’s export restrictions on rare earth magnets. However, the larger industry risks remain, especially as India ramps up its EV ambitions.

With the government’s supportive stance and the company’s proactive planning, Maruti is positioning itself to navigate the shifting global supply dynamics. The real test, however, will come as the industry moves towards full-scale electrification, when rare earth materials become even more central to production stability.

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