Mahindra and Uno Minda plan to produce rare-earth magnets in India, eyeing to cut dependence on China

Auto manufacturer Mahindra, as well as auto component manufacturer Uno Minda, are eyeing the local production of rare earth magnets in India with an aim to cut reliance on China. This plan is being devised keeping in sync with the Indian government's initiative to incentivise the production of the critical components.

China produces around 90 per cent of the rare earth magnets, controls the global market for this critical component that is highly important for the automotive industry. In the wake of the trade war between the US and China, the latter put restrictions on the export of rare earth magnets in April this year. While China has restarted some supplies to the United States and Europe, the Indian companies are still awaiting clearance, which is causing tension in the industry as a prolonged shortage of the critical component could eventually result in a production shutdown, causing massive disruption in the industry.

Reuters has reported that this situation has prompted the Indian government to look at building up stockpiles of rare earth magnets and offering incentives for the domestic manufacturing of the components that are critical to making electric vehicles and electronics. The news agency has reported, quoting a government official, that some companies have shown interest in investing or setting up rare earth magnet production, including Mahindra. "It will take a year or two to have our own production ... But we have to find ways to be independent," he reportedly said.

During a meeting in June with India's Ministry of Heavy Industries, Mahindra reportedly said that it is open to partnering with a company to make rare earth magnets or entering a long-term contract with a supplier producing them locally. The homegrown auto giant that recently launched two electric SUVs, namely the XEV 9e and BE 6, has captive demand for rare earth magnets and has indicated that the investment to make them locally is not that high.

On the other hand, auto component manufacturer Uno Minda, which is a supplier of parts to major carmakers in the country like Maruti Suzuki, also reportedly expressed interest in the local manufacturing of rare earth magnets at the same meeting.

Among others, auto component maker Sona Comstar, which supplies gears and motors to companies including Ford and Stellantis, was the first Indian company to show interest in making rare earth magnets locally, reported the news agency.

A final decision by the Mahindra and Uno Minda on the timeline of any investment into making rare earth magnets in India will depend on incentives offered by the government and the availability of raw materials, said the report. Availability of raw materials in India, which has the world's fifth-largest reserves of rare earth minerals, is not the biggest challenge. But the mining of them is.

The government controls rare earth mining through its entity IREL, which had an output of about 2,900 tons of rare earth ores in 2024. Most materials are used by the country's atomic and defence units, while some are exported to Japan.

But after the recent disruption of China's exports, IREL has plans to stop exports and expand its domestic mining and processing. Besides that, India is also looking to secure raw materials from elsewhere. Last December, IREL sent a team to Myanmar to study local rare earth resources, and the Indian government is working with five Central Asian countries to jointly explore the mining of critical minerals.

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