India automaker Mahindra, parts maker Minda eye local magnet production, sources say

By Aditi Shah and Neha Arora

NEW DELHI, July 10 (Reuters) - Indian auto company Mahindra & Mahindra and parts maker Uno Minda are looking to make rare earth magnets locally to cut reliance on China, as New Delhi draws up incentives for production of the critical components, company and government sources told Reuters.

China, which produces around 90% of the world's rare earth magnets, put restrictions in April on their export, and while it has restarted some supplies to the United States and Europe, Indian companies are still awaiting clearance from Beijing.

The disruption has prompted Prime Minister Narendra Modi's government to look at building up stockpiles of magnets and offering incentives for the domestic manufacture of the components critical to making electric vehicles and electronics.

"Some companies have shown interest in investing or setting up rare earth magnet production, including Mahindra," said a senior government official in Modi's administration.

"It will take a year or two to have our own production ... But we have to find ways to be independent," he said.

During a meeting in June with India's ministry of heavy industries, Mahindra MAHM.NS said it is open to partnering with a company to make magnets or entering a long-term contract with a supplier producing them locally, according to one of the sources.

Mahindra, which recently launched two electric SUVs, has captive demand for magnets and has indicated that the investment to make them locally is not that high, said the source.

Uno Minda UNOI.NS, supplier of parts to major carmakers in India like Maruti Suzuki MRTI.NS, also expressed interest in local magnet manufacturing at the same meeting, two of the sources said.

Maruti has already warned of production delays amid the disruption of rare earth magnet supply from China.

Component maker Sona Comstar SONB.NS, which supplies gears and motors to companies including Ford F.N and Stellantis STLAM.MI, was the first Indian company to show interest in making magnets domestically, it told Reuters in June.

Mahindra declined to comment. Minda and the ministry of heavy industries did not immediately respond to a request for comment.

A final decision by the two companies on the timeline of any investment into making rare earth magnets will depend on incentives offered by the government and the availability of raw materials, two of the sources said.

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.

JSW Steel JSTL.NS has expressed an interest in mining rare earths in India but it would need government approval, two sources said, adding that mining, unlike magnet production, could take several years.

JSW declined to comment.

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 Modi's government is working with five Central Asian countries to jointly explore the mining of critical minerals.