Indian automakers deepen China sourcing as supply risks grow

what happened

According to MINT, published by HT Digital Content Services, Ather Energy, Ceat and Lumax Auto Technologies are building China-focused procurement capabilities through subsidiaries, offices and local teams. The companies are seeking closer access to suppliers and lower costs for raw materials and critical parts. China accounted for 36% of India’s auto-component imports in FY26, up from 32% a year earlier, the Automotive Component Manufacturers Association of India (ACMA) said.

Aluminium and copper have become more expensive since January as electrification and wider industrial demand meet persistent supply constraints. The increase has pressured margins across vehicle and component manufacturing. A separate challenge comes from China’s April 2025 controls, which require export licenses for specified rare-earth materials and finished magnets used in electric motors.

Ceat managing director Arnab Banerjee said the tyre maker is considering a larger China presence and could hire local personnel. Its consolidated net profit fell 96.4% year-on-year to Rs.4 crore in Q1 FY27, while consolidated Ebitda margin declined to 8.6% from 10.9% in the comparable quarter. On 21 September, Ather Energy incorporated its wholly owned Ather Energy Hong Kong Ltd and plans to subscribe to 1.65 million ordinary shares at HKD 1 each. After rare-earth magnet disruptions, the EV maker deferred PM E-DRIVE subsidy claims worth Rs.26.25 crore covering up to 52,500 vehicles; it later developed a motor without heavy rare earths and obtained type approval from the Automotive Research Association of India (ARAI).

Lumax Auto Technologies opened a China representative office during FY26 to find technologies, improve sourcing and tooling, and pursue business opportunities with its Bengaluru-based SHIFT centre. Analysts at Primus Partners and MillenStrat Advisory and Research said local knowledge can improve supplier access and negotiations. McKinsey’s November 2025 report and Deloitte’s March 2026 analysis nevertheless warned about concentration risk; more than 90% of rare-earth processing is concentrated in China.

why it matters

China is becoming more deeply embedded in India’s automotive supply chain even as companies try to make procurement more resilient. The strategy may improve access to suppliers and pricing, but export controls and concentrated processing capacity remain material supply-chain risks.

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