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Informist, Tuesday, Jul. 8, 2025

 

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--ACMA: Confident India will have permanent fix to rare earths supply issue 
--ACMA: High GST rates on auto components headwind for industry 
--ACMA: Increasing freight costs a headwind for auto components industry 
--ACMA: Need strategy on critical minerals to secure future of mobility mfg 
--ACMA: Limited availability of rare earth magnets in India a concern 
--ACMA: India exports to US grew 8.4% on yr in FY25, exports to Europe dn 2% 
--ACMA: Auto components industry grew 9.6% in FY25 
--CONTEXT: ACMA Director General Mehta addressing media 
--ACMA: Auto components industry going through a challenging period
 

 

NEW DELHI - The Automotive Component Manufacturers Association of India Tuesday said the ongoing challenges in the industry emanating from the rare earth magnets supply issue underscore the need for a national strategy on critical minerals to secure the future of mobility manufacturing in India. However, the industry body expects India to have a permanent solution to the issue in the long term, given the availability of raw materials, even though it doesn't have the processing ability, it said at a press conference here.

 

The Centre has asked industry players to make a representation seeking a potential production-linked incentive scheme for such critical minerals, on which it would later take a call, the industry body said.

 

Alongside the rare earth magnets issue, the industry is also facing certain geopolitical challenges, especially because of US' reciprocal tariff policy, ACMA Director General Vinnie Mehta said.

 

Despite other such challenges, the automotive components industry recorded a growth of 9.6% year-on-year in 2024-25 (Apr-Mar), ACMA President Shradha Suri Marwah said. Marwah is also the chairperson and managing director of Subros Ltd. 

 

Currently, the industry is facing headwinds in the form of increasing freight costs, raw material price volatility, and high goods and services tax rates on auto components. Despite this, ACMA sees a largely stable demand scenario in India.

 

Amid the lingering rare earth magnets issue and lack of certainty on the US tariff regime, ACMA said it does not have any outlook for export of auto components. The sector has emerged as a bright spot in recent years when it comes to exports from India. In FY25, the industry's exports grew 9.3% on year. The outlook for exports growth for the ongoing fiscal year remains uncertain given the pending outcome of trade talks between India and the US. 

 

The US remains India's top destination for auto components exports, with the country forming 27% of the overall exports. Meanwhile, China remains India's biggest source of imports, with 32% of overall imports originating there.

 

Given Beijing's export curbs imposed on rare earth magnets, Indian companies are currently relying on their existing stockpile of the key input material and haven't imported these since April. "There is nothing, there is nothing available elsewhere, because China has 92% (of the raw material)," Marwah told Informist when asked if Indian companies are relying on any other country as a stop-gap measure.

 

In the last two years, regional conflicts have led to flare-ups on key trading routes along the Red Sea and the Singapore port which has led to traders re-routing their movement. ACMA said this has caused delays of up to 10-12 days in some cases, which is impacting companies' cash flows.  

 

"It's disruptive because we plan, like a lot in the component industry, we plan three months, six months ahead based on forecasts on certain components..." Marwah said. At the moment, it's hurting the industy, she said.

 

In FY25, India's exports of auto components to the US, which is a $7.35 billion market, grew 8.4% on year, while expors to Europe contracted 2.1%. Mehta said exports to Europe fell last fiscal year as the automotive industry there has been under a lot of pressure. Exports to Latin America grew 20.7%, those to Africa grew 17%, and exports within Asia grew 15% in FY25, ACMA said. 

 

The after-market segment registered a growth of 7.5% in FY25, supported by growing and an ageing vehicle base. This is lower than the 10% growth registered in FY24, due to cash issues faced by companies right now, Mehta said.   End

 

US$1 = INR 85.74

 

Reported by Anand JC

Edited by Tanima Banerjee

 

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