Highlights

• India dispatches high-level delegation to China to negotiate rare earth magnet export restrictions.
• Restrictions could paralyze India's automotive industry.
• China controls over 90% of global rare earth magnet production.
• Significant supply chain vulnerabilities exist for India and the United States.
• Immediate investment in domestic magnet production is crucial.
• Diversification of suppliers is necessary to prevent potential industrial and economic disruptions.

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In a stunning escalation of the global rare earth supply crunch, India has dispatched a high-level delegation to Beijing, seeking emergency relief from China’s restrictions on rare earth magnet exports. The move, reported by CargoConnect (opens in a new tab) and The Economic Times, underscores how China’s April 2025 export licensing regime has paralyzed critical shipments, placing India’s entire automotive sector, including EV and ICE production, at risk of shutdown.

Representatives from India’s Society of Indian Automobile Manufacturers (opens in a new tab) (SIAM) and Automotive Component Manufacturers Association (opens in a new tab) (ACMA) are en route to China, backed by India’s Ministry of Commerce and Ministry of External Affairs (opens in a new tab). Their mission: negotiate immediate approvals and unclog port bottlenecks where rare earth magnet shipments are currently stranded.

Industry sources warn that Indian OEMs and component makers may run out of magnet inventory within days, risking widespread factory shutdowns starting this week. The supply shock is affecting everything from electric drivetrains to essential components like power steering motors and sensors.

Why It Matters for the U.S.

While India scrambles diplomatically, the United States remains dangerously exposed, and much of the U.S. public in the dark due to the corporate media.  China processes over 90% of global rare earth magnets, and the U.S. lacks domestic capacity to produce commercial-scale alternatives, despite years of warnings and federal spending. India’s rapid, government-led mobilization contrasts sharply with America's sluggish and fragmented response, where most “ex-China” REE processors are still pre-revenue.

Meanwhile, India is preparing a public-private industrial strategy, a scheme discussed on Rare Earth Exchanges (REEx).  See “_India’s Bid to Break Rare Earth Dependence on China—But a Steep Trek Ahead.”_

On June 3, the Ministry of Heavy Industries (opens in a new tab) will convene stakeholders to finalize a roadmap for rare earth magnet manufacturing, with financial incentives, public-private partnership (PPP) models, and alternative supplier identification on the agenda. More and more, it seems that India is starting to figure things out. But what about President Trump and the American government?  Both market forces and industrial policy must be unleashed in America—and soon.

Final Thoughts

India’s diplomatic scramble is a wake-up call for Washington. If the world’s fastest-growing auto market is this vulnerable, how long can U.S. defense and EV sectors remain insulated? Without immediate investment in domestic magnet production and diversification of allied suppliers, the U.S. may soon face the same reckoning. China isn’t just flexing dominance—it’s redrawing the rules of global industrial leverage. 

Rare Earth Exchanges was launched to educate retail investors about the dynamics, challenges, opportunities, and risks associated with the rare earth supply chain, the move of America and other Western nations to be independent of China.