June 2025 – New Delhi, India — The Indian automobile sector has raised a clarion call for immediate government intervention following China’s recent move to tighten exports of rare-earth magnets, a critical component in electric vehicle (EV) motors. This development threatens to disrupt India’s rapidly growing EV market and poses significant challenges to the country’s ambitious goals for electric mobility.
The Crux of the Crisis: Rare-Earth Magnets and Their Importance
Rare-earth magnets, specifically neodymium-iron-boron (NdFeB) magnets, are essential for manufacturing efficient, high-performance electric motors used in EVs. These magnets are prized for their:
- Strong magnetic properties
- Lightweight nature
- Energy efficiency
China currently controls around 85% of the global supply of rare-earth elements and magnets, giving it significant leverage over industries worldwide, including India’s burgeoning EV ecosystem.
China’s Export Tightening: What Changed?
In early June 2025, Beijing announced new export quotas and stricter regulations on rare-earth magnets. This move is seen as part of a broader geopolitical strategy to maintain dominance over key supply chains amid rising global competition in the electric mobility sector.
China’s restrictions include:
- Lowered annual export quotas
- Increased scrutiny and bureaucratic hurdles on shipments
- Higher export tariffs in some cases
The impact? A sudden supply squeeze and price hikes that are rippling across EV manufacturers globally.
Impact on India’s Auto Industry
India’s auto industry, which is investing heavily in electric vehicles to meet climate targets and reduce oil dependency, is now grappling with this supply shock.
Immediate challenges include:
- Rising costs of EV motors, pushing up vehicle prices
- Delays in production schedules due to scarce magnet availability
- Potential slowdown in EV adoption, threatening government targets
According to the Society of Indian Automobile Manufacturers (SIAM), several domestic manufacturers rely on imported rare-earth magnets for their EV motors. The supply disruption risks not only higher costs but also delays in the rollout of new electric models.
India’s EV Ambitions at Stake
The Indian government has set ambitious goals:
- 30% of new vehicle sales to be electric by 2030
- Massive investment in EV infrastructure and incentives
- Push for Atmanirbhar Bharat (self-reliant India) in critical components
However, China’s export curbs have exposed a critical supply chain vulnerability that could undermine these ambitions unless addressed swiftly.
Calls for Government Action
Industry leaders are urging the Indian government to take urgent measures:
- Strategic stockpiling of rare-earth magnets to buffer supply shocks
- Incentives for domestic mining and processing of rare-earth elements
- Boosting R&D in alternative motor technologies less reliant on rare-earth magnets
- Diplomatic engagement with China and other rare-earth producing countries for stable supply
A joint statement by SIAM and the Automotive Component Manufacturers Association (ACMA) stresses that “the government’s proactive role is critical to protect India’s EV ecosystem and maintain the momentum of sustainable mobility.”
Efforts to Build Indigenous Capacity
India is already taking steps to reduce dependence on Chinese imports:
- Rare-earth mining projects have been fast-tracked in states like Odisha and Tamil Nadu.
- Partnerships with countries such as Australia and the USA for rare-earth sourcing are being explored.
- Investment in research on ferrite and other magnet alternatives is gaining ground.
These initiatives, however, need more policy support and faster execution to mitigate the current crisis.
Broader Global Implications
China’s move has sent shockwaves beyond India. Countries like the United States, Japan, and European nations are similarly affected, accelerating their efforts to diversify supply chains and secure rare-earth resources.
India’s predicament reflects a growing global awareness of the risks of overdependence on a single supplier for critical materials—especially in strategically important sectors like electric mobility.
Conclusion: Navigating a Critical Crossroad
The Indian automobile sector stands at a pivotal juncture. China’s tightened export of rare-earth magnets has spotlighted the vulnerabilities of global supply chains and the urgent need for self-reliance in strategic components.
For India to realize its electric vehicle dreams and achieve a sustainable transport future, collaborative government-industry action is indispensable. Accelerating domestic mining, investing in innovation, and securing alternative supplies will be crucial to overcoming this challenge.
India’s ability to navigate this crisis will not only define the future of its EV industry but also its broader standing in the global green mobility revolution.