China's recent export restrictions on rare earth magnets have raised significant concerns for India's automotive and electric vehicle (EV) industries. These magnets are essential components in EV motors, power steering systems, and various sensors. The new regulations, effective from April 4, 2025, require importers to provide detailed end-user certificates approved by both India's Ministry of External Affairs and the Chinese Embassy, certifying that the materials won't be used for military purposes or resold to third parties.
India's heavy reliance on China for rare earth magnets—importing approximately 460 tons last fiscal year with an expected increase to 700 tons this year—means these restrictions could disrupt production lines. Major automakers like Tata Motors, Mahindra & Mahindra, and Bajaj Auto have expressed concerns over potential shortages. Bajaj Auto, for instance, has warned of possible disruptions in its EV production starting July 2025 due to dwindling inventories.
In response, industry bodies such as the Society of Indian Automobile Manufacturers (SIAM) and the Auto Component Manufacturers Association of India (ACMA) have urged the Indian government to engage in diplomatic discussions with China to expedite the certification process and secure detained shipments.
While some companies like Ather Energy claim to remain largely unaffected due to diversified supply chains, the broader industry faces challenges. Efforts are underway to explore alternative sources, including potential partnerships with countries like Vietnam, which possesses significant untapped rare earth deposits.
This situation underscores the urgency for India to develop domestic capabilities in rare earth processing and magnet production to reduce dependency on imports and enhance supply chain resilience.
