‘Rare earth crunch a bigger issue for auto firms than expected’

• Shortage of rare earth materials due to China’s export ban is a significant concern for the Indian automobile sector.
• Some firms are indicating they will be cutting output due to the shortage.
• Confederation of Indian Industry (CII) president Rajiv Memani suggests selling the government’s stake in public sector firms to invest in establishing independent supply chains for rare earths and other critical elements.
• China restricted the export of rare earth magnets and related materials in April in retaliation for tariffs imposed by the U.S. on Chinese imports.
• Memani believes the government should have a strategy for critical supplies coming from outside, not just rare earths.
• The government currently accounts for 10% of the market capitalisation in India’s stock markets, which could be used more productively.
• Memani suggests selling even 10% of its holdings to create a sovereign wealth fund focusing on MSMEs and addressing critical issues like rare earths and critical supply independence.