At least three auto and auto ancillary firms—Ather Energy, Ceat, and Lumax Auto Technologies—are establishing local offices, hiring Chinese executives, and setting up offshore units to optimize procurement costs, secure rare-earth inputs, and bypass mounting trade bottlenecks. According to reports from Mint, these moves range from setting up subsidiaries and resource centres in the region to hiring local executives to gain deeper insights into supplier markets. The effort reflects China's expanding footprint in India's automotive supply chain, with China's share of India's auto component imports rising to 36% in FY26 from 32% a year earlier, according to the Automotive Component Manufacturers Association of India (ACMA).
The sourcing strategy has gained urgency as commodity prices have climbed sharply this year, with aluminium and copper prices rising since January driven by strong demand from electrification and broader industrial sectors alongside persistent supply constraints. As reported by Mint, higher prices of metals and other industrial inputs have squeezed margins for component makers and vehicle manufacturers alike. Ceat's consolidated net profit plunged 96.4% year-on-year to ₹4 crore in Q1 FY27, while its consolidated Ebitda margin contracted to 8.6% from 10.9% in the year-ago quarter as higher raw material costs weighed on profitability. The company is exploring deeper presence in China to strengthen sourcing capabilities and may recruit local personnel to manage requirements.
Ather Energy has incorporated a wholly owned Hong Kong subsidiary to support procurement and strengthen supply-chain resilience across the Asia-Pacific region. According to the company's stock exchange filing, Ather Energy Hong Kong Ltd was set up on 21 September following a board decision in February, with plans to subscribe to 1.65 million ordinary shares at HKD 1 apiece. This step follows major disruptions to Ather's supply of rare earth magnets after China's 2025 export restrictions hit production of its electric scooter motors, forcing the company to defer ₹26.25 crore in PM E-DRIVE subsidy claims for up to 52,500 vehicles. The company subsequently developed a motor that does not use heavy rare earths and secured type approval from the Automotive Research Association of India (ARAI).
Lumax Auto Technologies has established a representative office in China during FY26 to identify technologies, improve sourcing and tooling, and explore new business opportunities. As reported by Mint, the office focuses on technology benchmarking, sourcing and tooling, while facilitating technology partnerships and supporting new business opportunities. Industry analysts note that having boots on the ground is becoming essential for navigating complex trade environments, with dedicated sourcing centres staffed by local professionals delivering significantly better outcomes. According to Primus Partners' Anurag Singh, business practices in China require deep market knowledge, strong local relationships, and cultural understanding to secure the best deals.
Despite the benefits of Chinese engagement, global consultancies continue to warn against over-reliance on Chinese suppliers. According to McKinsey's November 2025 report on India's auto component industry, relying heavily on Chinese suppliers creates supply risks and a need to diversify sourcing. A Deloitte report from March 2026 on rare-earth supply chains highlighted that over 90% of rare earth processing is concentrated in China, making access to rare earths business-critical for many companies. The report calls on companies to audit upstream risks and build resilient, diversified sourcing networks over the long term, as concentration risk in critical components remains a significant concern for the sector. Meanwhile, India's Tata Motors Passenger Vehicles and Stellantis have expanded their partnership to include technology and product development, with plans to build vehicles in India for more than 50 global markets.
