Highlights
- China controls over 90% of the global rare earth magnet supply and has implemented stringent export licensing requirements since April 2025.
- India’s annual EV sector demand for rare earth magnets exceeds 7,000 tonnes, with zero import applications currently approved.
- The export restrictions could potentially halt EV production, especially two-wheelers, and expose India’s strategic vulnerability in critical manufacturing components.
China’s tightened export controls on rare earth magnets are beginning to paralyze India’s auto and electric vehicle industries, as mandatory licensing delays stall critical imports. Since April, shipments of rare earth magnets to India—essential for electric vehicle (EV) motors, sensors, and key automotive components—have slowed to a trickle, according to an OpIndia report by Aditi on June 5, 2025.
Rare earth magnets, primarily neodymium-iron-boron (NdFeB), are crucial in electric vehicle (EV) drivetrains, power steering systems, and braking systems. China controls over 90% of the global rare earth magnet supply and, since April, has now required extensive export license applications that can take months. As of today, zero Indian applications have been approved by China’s Ministry of Commerce, despite urgent lobbying by Indian officials and trade associations.
India’s annual demand for rare earth magnets in its electric vehicle (EV) sector alone exceeds 7,000 tonnes, nearly all of which is sourced from China. With import shipments halted for two months, manufacturers such as Flash Electronics, Hitachi Astemo, and Varroc Engineering are facing dwindling inventory. EV production, especially two-wheelers, may soon slow or stop altogether.
A delegation from the Society of Indian Automobile Manufacturers (SIAM) and the Automotive Component Manufacturers Association (ACMA) is preparing for emergency talks with Chinese officials. Yet China’s new tracking system for rare earth magnet exports—requiring disclosure of trading volumes and end users—may further extend delays.
Bottom line
India’s dependence on Chinese rare earth magnets has become a strategic vulnerability. Without swift approvals—or alternative suppliers—production shutdowns loom. India must act urgently to diversify its supply and invest in rare earth processing capabilities if it hopes to maintain momentum in EV manufacturing and protect its $100 billion auto industry.
Source: OpIndia, Aditi, “How China’s rare earth export rules are disrupting Indian automobile manufacturing (opens in a new tab),” June 5, 2025
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