Rare earth magnet crisis a ‘wake up’ call for auto industry: Commerce Ministry Special Secy

Rajesh Agrawal, Special Secretary, Ministry of Commerce and Industry, Government of India

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While the automobile industry has played a crucial role in economic growth of the country, crises like rare earth export ban by China serves as a wake call for the industry, highlighting India’s vulnerabilities, said Rajesh Agrawal, Special Secretary, Ministry of Commerce and Industry, Government of India, on Thursday.“The challenge we face today about permanent magnets is a wake-up call, we must diversify sourcing and indigenise critical parts, ” said Agrawal at the 65th Annual Convention of the Society of Indian Automobile Manufacturers (SIAM) on Thursday. In recent times, the strong demand from Africa, Latin America, Australia, Gulf countries and New Zealand has been hampered by a number of crises like red sea turmoil, US tariffs, among others.The government is ready to facilitate solutions for this, but the auto industry has to take the lead, he noted, calling for a deeper global supply chain participation.

A handicap situation

The top government official stressed on the importance of increasing the share of R&D to overcome the cost handicap and the need to prepare for open competition.The Indian auto industry faces a 15 to 19 per cent higher cost as compared to global peers.”The industry should highly invest in R&D and target to be technology leaders. Innovative mobility solutions can be a game changer for India’s growth and for achieving Viksit Bharat by 2047,” he noted, highlighting that time demands for a shift from traditional economic centres to new growth hubs, with a focus on supply chain rebuilding, FTAs (free trade agreements), and innovation driven production and trade opportunities.Echoing his views, Sudhakar Dalela, Secretary (ER), Ministry of External Affairs, Government of India, said there should be a diversification of supply chains and markets, especially in Latin America, Africa, and developed markets.“While the domestic market remains robust, it is equally important for the automobile industry to strengthen and expand its global footprint.”