China Targets India’s Auto Industry by Restricting Rare Earth Magnet Supplies
China has begun targeting India’s automotive sector by delaying the supply of critical rare earth magnets used in electric vehicles (EVs) and hybrid cars. According to industry sources, China is not providing Indian automobile companies with timely shipments of these essential components, which is now starting to disrupt production.
While the Chinese government has maintained that the measures are part of broader export controls on six types of rare earth metals, Indian industry leaders believe the restrictions are deliberately affecting Indian manufacturers.
Experts noted that European and American buyers are also facing restrictions but have negotiated partial relief, whereas Indian companies have received minimal concessions.
Key Details of the Impact:
- India imported 540 tonnes of rare earth magnets in FY 2024–25, with 80% sourced from China.
- Companies currently have only four to six weeks of inventory left.
- If supply issues persist, production of electric vehicles and hybrids could be severely affected.
- The constraints could also hit India’s plans to ramp up local EV manufacturing.
China’s Export Ban on Six Rare Metals
On April 3, 2025, China officially banned the export of six high-value metals, including dysprosium and terbium, citing national security concerns. Companies worldwide have since been struggling to secure alternative suppliers.
Critical Use in EVs and Hybrids
Rare earth magnets are a crucial component in electric drivetrains, motors, and powertrains. Without them, production lines for electric and hybrid cars cannot function.
Industry Concerns
Automotive executives said that although India is building some capacity to produce magnets domestically, it will take years to meet the current demand. Meanwhile, automakers are holding urgent talks with the Indian government to explore options to ease the supply crunch.
If the crisis continues, consumers could face delays in vehicle deliveries and higher prices.
