As China’s export ban on rare earth magnets disrupts global industries, the Indian government is stepping in to assist the country’s auto sector in addressing the fallout.
According to sources familiar with the matter, the Prime Minister's Office and the Indian embassy in Beijing are coordinating efforts to help Indian automotive companies engage with China’s commerce ministry.
China processes around 90% of the world’s rare earth magnets—crucial not just for automobiles but also for clean energy, electronics, and defence manufacturing. The recent halt in exports has left industries scrambling for alternatives.
Three key Indian ministries—Heavy Industries, External Affairs, and Commerce and Industry—are actively involved in addressing the situation. While a 50-member delegation including representatives from original equipment manufacturers (OEMs), the Society of Indian Automobile Manufacturers (SIAM), and the Automotive Component Manufacturers Association of India (ACMA) had planned a visit to China this week, the trip has reportedly been postponed.
As of now, no rare earth magnets have been imported from China since the export restrictions were announced on April 4, and no new import licences have been issued since then.
In response to the growing urgency, India is exploring the creation of a comprehensive policy framework for rare earth magnets to reduce dependency on Chinese imports. However, insiders estimate that developing such domestic capabilities will take at least two to three years.
According to Reuters, the Ministry of Heavy Industries is drafting a production-linked incentive (PLI) scheme that could subsidise the cost gap between locally produced magnets and cheaper Chinese imports. The aim is to encourage domestic manufacturing and ensure cost competitiveness. Details of the scheme—including its funding—are yet to be finalised, but government officials are expected to meet with industry stakeholders next week.
Meanwhile, IREL (India) Ltd, a government-owned enterprise, has long been engaged in mining rare earth materials—mainly serving atomic energy and defence sectors. However, for broader industrial use, India remains reliant on imports, largely from China.
The impact of China’s restrictions is already being felt in Japan, where Suzuki Motor recently suspended production of its Swift model due to component shortages linked to the export ban.