New Delhi [India], September 12 (ANI): Vivek Vikram Singh, Managing Director and Group CEO of Sona Comstar, has urged the government to hold discussions with China to address the supply constraints around rare earth metals that are vital for the auto component industry.

'We need solutions. The government should talk to the Chinese side and get rid of these rare earth export controls. The interim solution (using rare-earth-free magnets) is not the best solution. This affects us and our customers. It would be good if the problem is resolved. We are operating with constraints now, and our hope is that we will run smoothly going ahead,' Singh said, talking to ANI on the sidelines of the Automotive Component Manufacturers Association's annual event here in the national capital.

He noted that the company suffered about three weeks of production loss in the past quarter due to a rare earth shortage.

While Sona Comstar has started using alternatives, he admitted these come with limitations.

'In August, we have reached 95% production level. We have started using heavy, rare-earth-free magnets. However, it is not fully efficient on the cost and performance side, particularly for the heavy-duty motors. For two and three-wheelers, they are okay. For cars and buses, they are next to impossible,' he said.

Early this April, China announced a decision to implement export controls on certain rare earth-related items, pushing a supply shortage across the world, including India. Export controls imposed by China have raised concerns about supply chain vulnerabilities, particularly in critical sectors.

India aims to diversify its rare earth supply through a combination of imports, domestic mining and international partnerships. The government is investing in research and development to improve domestic refining and processing capabilities. India is also engaging in diplomatic efforts to secure stable and affordable access to rare earth materials, while also promoting cooperation with like-minded countries.

The central government has recently earmarked Rs 1,345 crore to incentivise rare earth magnets production in India.

China's overwhelming control of global rare earth processing - commanding over 90 per cent of the world's magnet production capacity - has created significant vulnerabilities for industries worldwide. Beyond China, there are only a few alternative suppliers of critical minerals.

Meanwhile, Singh also welcomed the recent GST rate rationalisation, describing it as a timely boost for the industry.

'The GST rate cuts are a Bardaan (boon) for the industry, and Modi ji has got Diwali early this year. If the GST rate cut is completely transmitted to consumers, then the demand can rise upwards of 10-15 per cent. Growth is definite. It is a positive and a bold step,' he said.

Asked about the impact of U.S. tariffs, Singh said the sector is relatively unaffected.

'Our sector is less affected...The expected loss in overall exports to the US because of the tariffs can largely be negated by the GST reforms,' he explained.

Singh also underlined the importance of trade negotiations with Europe. An India-EU FTA is expected to be finalised later this year, and talks for the deal are currently underway.

'From India's point of view, the European FTA is very important. The size of the EU market in terms of auto is lower than that of the US, but it is quite crucial. In terms of value, too, it is quite sizable. For India, it is a big opportunity and we should not miss this opportunity,' he said. (ANI)