India's Sona Comstar CEO: Company plans local rare earth magnet production to reduce China import dependence

India's Sona Comstar CEO: Company plans local rare earth magnet production to reduce China import dependence

In a move to mitigate risks associated with geopolitical tensions and reduce dependence on Chinese imports, Sona Comstar, a prominent Indian auto parts manufacturer, has announced plans to establish local production of rare earth magnets. The company's CEO, Vivek Vikram Singh, revealed these intentions during a recent interview with the Economic Times [2].

Sona Comstar's decision comes amidst a severe supply crunch of rare earth magnets, a critical component in permanent magnet synchronous motors (PMSMs) used in electric vehicles. The supply crunch is primarily due to China's export restrictions and the absence of domestic production capabilities in India. Midwest Advanced Materials, Entellus Industries, and Indian Rare Earths (IREL) have already presented plans to the Indian government to build in-house magnet supply chains, aiming to reduce reliance on Chinese imports [1].

Singh stated that the company has nearly a dozen applications pending for importing rare earth magnets from China, highlighting the urgency of finding alternative sources. He also mentioned that Sona Comstar is exploring opportunities to scale up operations in India to cater to the local market and mitigate risks associated with Western geopolitical tensions. The company is aiming for a 50:50 revenue split between Eastern and Western markets, with a focus on diversifying its operations to include other sectors that use motors, transmissions, and sensors [2].

The push for local production of rare earth magnets is not just a strategic move for Sona Comstar but also a response to the broader challenges faced by the Indian auto industry. The industry has been grappling with supply timelines and uncertainty due to the absence of approvals from the Chinese government to procure rare earth magnets. The situation has worsened over the past few months, with no Indian auto component or vehicle company receiving approval to source these magnets [1].

The Indian government has taken notice of the supply crunch and is considering incentives to support local production. A proposed ₹3,500–5,000 crore scheme aims to incentivize the production of rare earth minerals and derived magnets in the country. The scheme is expected to be approved in a fortnight, with the priority being to start domestic-critical mineral production in the shortest time period [1].

In conclusion, Sona Comstar's plans to establish local production of rare earth magnets are a strategic response to the current geopolitical tensions and supply crunch. The company's move is part of a broader trend of Indian companies and the government working together to reduce dependence on Chinese imports and build domestic capabilities in critical industries.

References:
[1] https://m.economictimes.com/industry/auto/auto-news/magnet-crunch-indian-firms-pitch-supply-chain-plans-to-curb-chinas-rare-earth-dominance/articleshow/122020154.cms
[2] https://economictimes.indiatimes.com/industry/auto/auto-components/sona-comstar-looks-east-to-diversify-revenue-mix/articleshow/122076738.cms