India's EV sector faces rare earth magnet shortage amid China's export curbs

India's electric vehicle (EV) industry is facing a critical mineral challenge due to China's restrictions on rare earth magnet exports. Indian auto component and automobile companies are close to exhausting their current inventories of rare earth magnets, threatening India's 2030 economic goals. A delegation from the industry is planning to negotiate with China to address procedural bottlenecks.

India's electric vehicle (EV) industry is facing a critical mineral challenge due to China's restrictions on rare earth magnet exports. Indian auto component and automobile companies are close to exhausting their current inventories of rare earth magnets, threatening India's 2030 economic goals. A delegation from the industry is planning to negotiate with China to address procedural bottlenecks.

China's export restrictions on rare earth magnets, introduced in April, have led to significant shipment delays and inventory depletion. These magnets are crucial for electric vehicle motors and other automotive components. India, which relies heavily on Chinese imports for these magnets, is facing a potential halt in car production [1].

The Society of Indian Automobile Manufacturers (SIAM) and the Automotive Component Manufacturers Association of India (ACMA) have urged the government to intervene and lobby Beijing to ease restrictions. Industry insiders warn that a production stoppage is imminent, with inventories expected to run out by the end of May [1].

A high-level delegation comprising representatives from SIAM, ACMA, and leading original equipment manufacturers (OEMs) is set to meet with senior Chinese government officials next week. The goal is to accelerate the approval process and restore the steady flow of these critical imports [3].

The Indian government has also scheduled a meeting with key stakeholders on June 3 to finalize a concept note aimed at encouraging domestic manufacturing of rare earth magnets. The proposed plan includes targeted financial incentives, a public-private partnership framework, and efforts to identify alternative international suppliers [3].

China's dominance in the rare earth supply chain, accounting for around 70-80% of global rare earth processing and over 90% of rare earth magnet production, makes Indian automakers and component manufacturers heavily reliant on Chinese imports [3].

The export restrictions are part of China's response to U.S. President Donald Trump's tariffs, aiming to safeguard national security and interests [1]. China's embassy in New Delhi has stated that it is actively facilitating and streamlining compliant trade according to legal and regulatory requirements [1].

The potential impact on India's EV industry is severe, with the fast-growing electric mobility segment at risk. Any further delay could lead to production halts and significant economic repercussions [3].

References:
[1] https://m.economictimes.com/industry/auto/auto-news/china-rare-earth-magnet-expot-import-restriction-a-chinese-move-could-stop-indian-car-production-dead-in-its-tracks/articleshow/121478949.cms
[3] https://www.business-standard.com/industry/news/rare-earth-magnet-crisis-india-s-auto-sector-to-head-to-beijing-for-talks-125053100468_1.html