rare earth magnet case
China has once again taken such a step which can create a stir in many important sectors of India. This time it is a matter of new export restrictions imposed on products related to Rare Earth Magnets. Due to this new policy of China, a big challenge has arisen for the Indian companies working in sectors like auto industry, electronics, defense and machinery.
During the festive season, when consumption is increasing in India and the government has also given relief in GST, then this ban can prove to be a blow to these companies. Especially those companies which were maintaining their production by importing special types of light magnet parts and assemblies from China, are now in trouble.
What is banned?
China has now made a rule that any component containing more than 0.1% of the total value of rare earth magnets cannot be exported without government approval from November 8, meaning that now companies from other countries including India will have to take special permission from China before purchasing such products.
It is not just a matter of one or two parts. These magnets are used in critical components like EV motors, gear shifting systems, rotary assemblies, battery systems, and traction motors. When the supply of these parts stops, the entire production is affected.
What will be the impact on India?
Indian auto companies had already made do with light magnets in view of the old ban on rare earth magnets. But now China has closed that option also. According to an ET report, according to industry experts, this ban is so widespread that it will affect almost every sector and no one will be left untouched, including automobile, consumer electronics, defence, aerospace and machinery.
Thousands of small and big parts are required in the auto sector. If even a single part is not available, the assembly of the entire vehicle or machine may come to a halt. This is the reason why there is an atmosphere of concern in companies.
There are options, but not easy
Companies are now trying to find alternative sources, but this task is not so easy. There are problems like production quality, supply timing and technical balance. Apart from this, importing parts with similar technology from other countries can also be costly. An ET report said that a senior official said, ‘Even if alternatives are found, dependence on China cannot be completely eliminated and if even a single link in the supply chain breaks, production will stop.’