New Delhi, June 12 (IANS) Maruti Suzuki India on Thursday denied any disruption to its operations due to the rare earth magnet crisis, saying that they are monitoring the evolving situation.

Reports have surfaced that the production plans for the automaker’s upcoming electric sport utility vehicle (SUV), the e-Vitara, may be affected due to China’s restriction on exports of rare earth minerals. The e-Vitara is expected to be launched in India before the end of September.

“Regarding the situation on rare earth, as of now, there is no disruption in our operation due to this issue. There is a lot of uncertainty, and the situation is continuously evolving,” a Maruti Suzuki India spokesperson said on the sidelines of the announcement of Bharat NCAP safety ratings of the Dzire compact sedan and the Baleno premium hatchback.

“We are monitoring the situation and pursuing multiple solutions to ensure continuity in our operations. If and when there is any material impact to our business, we will inform all stakeholders in line with regulatory requirements,” the spokesperson added.

The situation continues to evolve for the Indian automotive players in their quest to have a steady flow of rare earth magnets amid China’s export restrictions.

Rare earth magnets, low in cost but critical in function, could emerge as a key supply-side risk for the India’s automotive sector if China’s export restrictions and delays in shipment clearances persist.

A disruption lasting beyond a month can impact electric vehicle (EV) launches, affect production and weigh on the sector’s growth momentum, according to a Crisil Ratings report.

Recognising the risk, the government and automakers are taking action on two fronts. In the short term, the focus is on building strategic inventories, tapping alternative suppliers and accelerating domestic assembly under Production Linked Incentive schemes.

For the long term, reducing import dependency will hinge on fast-tracking rare earth exploration, building local production capacity and investing in recycling infrastructure.

In a constrained supply scenario, magnets may also get diverted to ICE models, which require fewer units, potentially impacting EV growth.

In April, China which is the world’s dominant exporter of rare earth magnets imposed export restrictions on seven rare earth elements and finished magnets, mandating export licences. The revised framework demands detailed end-use disclosures and client declarations, including confirmation that the products will not be used in defence or re-exported to the US.

India sourced over 80 per cent of its 540 tonne magnet imports from China last fiscal.

—IANS

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