Rare earth magnets: India hurries to set up new supply chains for key EV component as China curbs exports

China controls 70% of rare earth magnets’ production, and 90% of the supplies.
| Photo Credit:
Doug Kanter

India is racing against time to forge rare earth magnet supply chains with five nations as China’s export choke-hold imperils EV production here. And the clock is set at: 45-60 days.

Discussions have been initiated with five other countries – Vietnam, Indonesia, Japan, the US and Russia – for supply of rare earth magnets, a key EV making component; with parallel discussions being underway at the Chinese Embassy here to allow India buyers access to the item.

India’s import of the item is approximately to the tune of 809 tonnes.

An at least 45-day time period is being sought to explore and set up supply chains from Asian nations, while for Russia and the US, it will be a long drawn 60-day timeline, top government officials taking direct stock of the matter, told businessline.

One alternative, recently discussed but yet to be formalised, is to allow companies to import entire assemblies or sub-assemblies instead of individual magnets. But, necessary changes to quality control rules and eligibility norms under various government schemes mandate domestic value addition need to be relaxed. Most of these schemes seek domestic-value add based on which subsidies or production incentives are provided here. 

Rare earth magnet supplies with automobile makers is expected to run till June-end, “at the most”. Since mid-April, there have been “no supplies”. 

China has already rejected or held back permission to export rare earth magnets to Indian companies. Attempts made by some companies in May were also shot-down by the Chinese. Despite India granting export certificates to auto-makers, the same is yet to be accepted.

Since April 4, the Asian nation has imposed curbs of sale and export of rare earth magnets seeking undertakings that these would be used for civilian purposes and not for defence or military usage.

China controls 70 per cent of the item’s production, and 90 per cent of the supplies.

“Parallel discussions are on with the Chinese Embassy here to see that supply is restored,” said a source.

Diplomatic push 

Efforts are now underway through diplomatic channels. 

The Indian Embassy in Beijing is working to arrange a meeting between an Indian industry delegation and Chinese government officials, including representatives from the Chinese Ministry of Commerce.

Last week, top brass of one of the line ministries called up the Indian Ambassador in Beijing to coordinate with the Chinese Ministry of Commerce, so that rare earth magnets can be provided to the Indian auto car makers which would make it easier for them and does not affect day-to-day functioning.

Efforts are on by two other line ministries to go ahead and speed up the processes and ensure that all the approvals and permissions which will be needed for the auto makers are in place.

“At this point, a SIAM delegation is scheduled to go to China, but the date’s yet to be fixed,” said a government top brass.

Supply chain concerns

Multiple government officials tell businessline that efforts are on with Vietnam and Indonesia being the two closest possibilities.

Japan does have rare magnets, but they’re not of the same quality as that of which is found in China, the official said adding that: “Vietnam would be the option right now because the supply chain can be set up with immediate effect.”

The problem is, in Vietnam, 90 per cent of the rare earth magnets is being used for domestic purposes; so exports would be of lesser quantities. In case of Indonesia the domestic usage is 50 per cent; but there is some concern of Chinese influence over supplies.

More Like This

Published on June 8, 2025