India’s Rare Earth Magnet Challenge: Dependency on China Causes Supply Chain Issues

52 Indian companies rely on Chinese magnets to supply automobile manufacturers across the country.

Growing Reliance on Chinese Imports

The number of Indian companies seeking permits from China for rare earth magnet imports has doubled in just two weeks. This increase comes after China introduced a new rule. Now, exporters must obtain a special license.

Key Points:

• 21 Indian companies are now waiting for licenses, up from 11.
• Major applicants include Bosch India, Marelli Powertrain India, and TVS Motor.
• 52 Indian companies depend on Chinese magnets for automobile manufacturing.

Complex Situation with Rare Magnets

The certificates require guarantees that these materials will not be used for weapons of mass destruction.

Rare Earth Issue: India Affected by US-China Trade Tensions

Indian officials are trying to negotiate with Chinese authorities to resolve the issue. However, progress has been slow. The US has already secured a deal with China for rare earth magnet supply. But Indian companies are still waiting for approval.

Current Challenges:

• European manufacturers have received approval, but Indian companies are still waiting.
• Strained relations between India and China make the situation more difficult.
• Production disruptions are expected if licensing delays continue.

Impact on Industry:

India imported 870 tonnes of rare earth magnets worth ₹306 crore in 2024-25. Even though the value is small compared to the industry size, the lack of even one component can stop vehicle production.