Sona Comstar, India’s biggest importer of rare earth magnets, plans to locally manufacture the critical components used in electric vehicles, tapping into a government push to incentivise their production at home as China restricts their exports.
China, which produces around 90% of the world’s rare earth magnets, put restrictions in April on their exports as part of its response to U.S. tariffs. While the U.S. and China signed a deal this month to speed up approvals of rare earth exports, governments and companies globally are scrambling to look for alternatives.
India, which has the world’s third-largest car market and its fifth-largest reserves of rare earths, is working on a new program to incentivise magnet production locally to wean off China.
Gurgaon-based Sona Comstar, officially known as Sona BLW Precision Forgings, is the first company in India to announce plans to make magnets domestically after the government’s program became public.
“Being the largest importer of rare earth magnets, we are the single largest affected party in the country. We have to look at India’s self-sufficiency on magnets and are working with the government on it,” Sona Comstar CEO Vivek Vikram Singh said in an interview.
The company, which supplies gears and motors to car makers such as Tesla and Stellantis, imported 120 metric tonnes of magnets from China in the last financial year.
Singh said the company will look at the Indian incentives once they are finalised, and other factors, to determine its investment in the local manufacturing. He said the company has the funds for local manufacturing, citing its five-fold increase in revenue to more than $400 million over the past five years.
Any plans to mine and process rare earths would take years to develop, so will not provide an immediate solution to reducing reliance on China. Sona Comstar itself had plans to import 200 tonnes of magnets this year to meet the growing needs of its EV customers which make up about a third of its revenue, Singh said.
The U.S. currently accounts for about 40% of Sona Comstar’s revenue, ahead of India and Europe. With the recent acquisition of the Indian railways business of Escorts Kubota, the company has diversified beyond automotive and will see the majority of its revenues coming from India this year.
For future growth, Sona Comstar is looking at acquiring more customers in China, Japan and South Korea.
The plans for growth come amid the sudden death in June of Sona Comstar Chairman Sunjay Kapur, which sent the company’s shares lower over fears over its future direction. The company appointed Jeffrey Mark Overly as its new chairman.
Singh, however, said this will not change the company’s course as it is run by a professional team of executives and has the kind of “management bench strength” needed to overcome crises and disruptions.