The Automotive Component Manufacturers Association of India (ACMA) has raised alarms over a critical shortage of rare earth magnets, urging the government to formulate a national strategy on critical materials to safeguard electric vehicle (EV) production. The scarcity, driven by geopolitical tensions and supply chain disruptions, threatens production losses and could hinder India’s ambitions in the global EV market. ACMA President Shradha Suri Marwah highlighted the industry’s proactive response, noting that manufacturers are exploring alternative solutions to mitigate the impact.
“The limited availability of rare earth magnets remains a major concern, underscoring the need for a national strategy to secure the future of EV and mobility manufacturing in India,” Marwah said. Rare earth magnets, essential for EV motors, are heavily reliant on imports, making the sector vulnerable to global supply fluctuations.
Auto Component Industry grows 14% CAGR since 2020
Despite these hurdles, the auto component industry posted an impressive turnover of $80.2 billion in FY2025, reflecting a 10% increase over the previous year. Over the last five years, the sector has maintained a strong compound annual growth rate (CAGR) of 14%, resulting in its size almost doubling since FY2020.
Marwah attributed this growth to strong domestic demand, rising exports, and increased value addition. “FY25 was a milestone year, driven by resilience and adaptability,” she said. As India accelerates its transition to new-age mobility, the industry is investing heavily in technology, localisation, and innovation to cater to both domestic and global markets. However, the reliance on critical materials like rare earths poses a significant risk to this progress.
A national strategy, ACMA argues, would ensure a stable supply chain, reduce import dependency, and bolster India’s position as a manufacturing hub. The call for action comes at a pivotal moment, as India aims to lead in sustainable mobility. Without a cohesive policy on critical materials, the auto component sector’s growth trajectory and the nation’s EV aspirations could face setbacks. Stakeholders now await government intervention to address this pressing issue and secure the industry’s future.
ACMA Industry performance review H1 2024-25: Key insights
ACMA reported robust growth for the auto component industry in H1 2024-25. Sales to original equipment manufacturers (OEMs) reached Rs 5.70 lakh crore, up 10% year-on-year, fuelled by an 8% rise in vehicle production and a shift toward larger, high-value vehicles. Exports grew 8% to $22.9 billion (Rs. 1,92,346 crore), with North America (32% share) up 8.4% and Asia (26% share) surging 15.1%, though Europe (29.5% share) saw a 2.1% decline. Key export categories included drive transmission, steering, engine components, and suspension parts.
Imports rose 7.3% to $22.4 billion, primarily from Asia, resulting in a trade surplus of $453 million, up from $300 million in FY2023-24. The aftermarket expanded 6% to Rs. 99,948 crore ($11.8 billion), driven by a growing used vehicle base, formalised repair systems, and strong rural demand boosted by e-commerce.
