India’s automotive sector is staring at a potential production slowdown as a high-level industry delegation is still awaiting clearance to travel to China for urgent talks on rare earth magnet supplies.
Despite receiving visas in May, around 40–50 senior executives from leading Indian auto companies have not yet departed, as the Chinese Ministry of Commerce has not granted formal meeting approvals.
Why Rare Earth Magnets Matter from China?
Rare earth magnets are critical components in electric vehicles (EVs), hybrids, and even ICE vehicles, powering systems like electric power steering, braking systems, and propulsion motors.
These magnets are made from elements like samarium, dysprosium, terbium, and gadolinium, which are almost entirely processed in China, the global leader with over 90% market share.
What’s Holding Things Up?
In April 2025, China imposed strict export controls on seven rare earth elements and finished magnets, requiring special export licenses and detailed end-use declarations.
The new rules also prohibit re-export to the U.S. or use in defense applications. As a result, not a single export license has been issued to Indian firms so far, despite 30 pending applications backed by the Indian government.
Impact on India’s Auto Industry
India imported over 80% of its 540 tonnes of rare earth magnets from China last fiscal year. With no shipments arriving since April, automakers are warning of production delays, stalled EV launches, and a ripple effect across the supply chain.
Industry insiders are urging the Indian government to intervene diplomatically to resolve the deadlock.
What’s Next?
While the delegation remains grounded, discussions are underway to diversify sourcing from countries like Vietnam and Australia, and to accelerate domestic rare earth processing.
However, these are long-term solutions. For now, the industry’s immediate future hinges on China’s approval.
Also Read: July 2025 Car Launches in India: A Month of Electrifying Debuts and Bold Facelifts
