The recent improvement in India and China relations has brightened the outlook for automobile sector and original equipment manufacturers, according to analysts.
In his two-day visit to India, Chinese Foreign Minister Wang Yi assured Indian counterpart S Jaishankar that the country will ease restrictions on exports to India of fertilisers, rare-earth minerals, and tunnel boring machines. Yi also met with Prime Minister Narendra Modi during the visit.
Indian automakers faced a real challenge when China imposed restriction on rare-earth mineral exports. Especially, concern rose on electric vehicle production and their penetration.
Modi will repay the visit by attending Shanghai Cooperation Organisation summit at Tianjin to be held later this month.
For automobile makers, China’s recent lifting of restrictions on rare earth magnets are crucial. These magnets are used for electric vehicles, wind turbines, electronics and other applications.
“China lifting rare earth magnet export restrictions to India will immediately ease supply bottlenecks for automakers and OEMs, allowing companies to restore volume targets, and reduce reliance on costly alternative sources,” said Anshul Jain, head, research at Lakshmishree. “OEMs will revert to Chinese suppliers to meet urgent demand for components like permanent magnet motors, sensors, and ignition coils.”
In April, China, which accounts for 60% of global supply of rare earth minerals, put an export curb as it engaged in a tit-for-tat tariff war with the US then.
As per analysts, it will take three-to-four weeks for the supplies to India to resume smoothly, and its effect to be reflected in companies’ operations.
