New Delhi:

Maruti Suzuki

India on Thursday clarified that its operations remain unaffected by the ongoing rare earth magnet supply constraints, even as the

Indian auto industry

grapples with uncertainty stemming from China’s recent export restrictions on critical materials, stated IANS.

Responding to reports that the production of its upcoming electric SUV, the e-Vitara, might be impacted, a company spokesperson said: “Regarding the situation on rare earth, as of now, there is no disruption in our operation due to this issue. There is a lot of uncertainty, and the situation is continuously evolving.” The statement came during the announcement of Bharat NCAP safety ratings for the Baleno and Dzire models.

Expected to be launched by the end of September, the e-Vitara is a key part of Maruti’s electric mobility strategy. The company added that it is actively monitoring the situation and pursuing multiple solutions to ensure continuity: “If and when there is any material impact to our business, we will inform all stakeholders in line with regulatory requirements.”

Broader Industry Risks

The Indian auto sector is on alert after China, which processes over 90 per cent of the world’s rare earth magnets, imposed export restrictions in April. These new rules require licences and detailed disclosures about the end-use of materials like samarium, dysprosium, and terbium—elements essential for manufacturing electric motors in EVs.

According to Crisil Ratings, rare earth magnets—though inexpensive—are crucial components, and continued supply disruptions could pose a significant risk to India’s automotive production pipeline. A disruption lasting beyond a month may delay EV launches, impact production schedules, and weigh down the sector’s growth momentum, the agency warned.

Short- and Long-Term Strategies

To mitigate the risk, both the government and automakers are acting on dual fronts. In the short term, efforts are focused on building strategic inventories, identifying alternative global suppliers, and ramping up domestic assembly under the Production Linked Incentive (PLI) scheme.

Long-term solutions include reducing import dependency through accelerated exploration of domestic rare earth deposits, investing in local magnet manufacturing, and creating recycling infrastructure to reclaim critical materials.

EV Growth at Risk

In the current constrained supply scenario, there are concerns that available magnets could be diverted to internal combustion engine (ICE) vehicles, which require fewer units. This could slow down India’s EV momentum, especially at a time when automakers are ramping up investments in electric mobility.

India imported over 80 per cent of its 540 tonnes of rare earth magnets from China in FY24. With over 30 import requests still awaiting clearance from Chinese authorities, stakeholders remain cautious as they navigate an increasingly uncertain supply environment.