Will Your EVs Be Delayed? Indian Automakers May Halt Production by July Over Rare Earth Magnet Shortage

Just when the semiconductor crisis got abated, India’s automotive industry is staring at fresh headwinds as China’s tightened export controls on rare earth magnets begin to squeeze global supply chains. This latest development is disrupting production schedules, pressuring suppliers, and casting doubt on India’s ambitious electric vehicle (EV) expansion goals.

Industry insiders indicate that Indian automakers, particularly those involved in electric vehicle production, are facing the possibility of a significant “production halt” by July due to a shortage of rare earth magnets.

Also Read: China Halts Exports Of Critical Minerals, Can India Seize the Moment? | Republic World

What is a rare earth magnet and why does it matter?

Rare earth magnets are essential to a wide range of modern vehicles, especially EVs and hybrids. They are essential for electric motors, braking systems, power steering, and other systems that rely on strong magnetic fields for efficiency and performance.

At present, China dominates the processing and export of these materials — accounting for over 90% of global supply.

What has China done?

It may be recalled that in April, Beijing imposed stricter licensing rules on the export of certain rare earth alloys and permanent magnets, citing national security concerns. This was a direct response to the US imposing tariffs.

However, the move has choked global access, with Indian component makers among the first to feel the heat.

Automakers feel the heat

Similar to the chip shortage crisis a few years ago, automakers across the board have been left scrambling for supplies of rare earth magnets. Several firms indicated that their applications for export clearance from China remain stuck in bureaucratic hurdles.

According to industry sources, more than a dozen Indian companies are yet to receive approvals, threatening to derail production schedules.

According to Uday Narang, Founder, Omega Seiki Pvt. Ltd, “The recent restrictions on rare earth magnets will certainly cause short-term disruption in the Indian EV industry, given the current level of dependence.”

He went on to add, “However, in the long run, I believe this is a turning point. India is already engaging in high-level discussions with China to address the issue, while also actively working towards reducing dependence on rare earth elements. We're exploring viable alternatives through our strong technology partnerships with nations like Japan, Korea, Russia, and others.”

Bajaj Auto has already flagged concerns, stating that production of certain EV models could come to a halt by July if the supply logjam isn't cleared.

“For some of these EV component makers, the entire supply chain is based out of China,” Rajiv Bajaj, Managing Director, Bajaj Auto, told a TV channel, adding, “If it is not checked, then, in a matter of weeks, the entire Indian EV industry will come to a grinding halt as China has put export controls on rare-earth magnets to India.”

Meanwhile, passenger car major Maruti Suzuki has so far managed to maintain production, thanks to alternate sourcing strategies and existing inventory buffers.

In response to the situation, Maruti Suzuki India's Senior Executive Officer, Rahul Bharti, indicated that China is now requiring an end-user certificate, which must be endorsed by the Indian government. He stated, “So that process is on and industry is in discussion with the government.
We have materials and technologies, so this move will not impact our business or product pipeline."

Government intervention sought

The Society of Indian Automobile Manufacturers (SIAM) has urged the Centre to step in and facilitate diplomatic engagement with Beijing. Industry bodies have also requested that the Ministry of Commerce expedite talks to unblock shipments and ensure smooth access to critical inputs.

Meanwhile, Heavy Industries Minister H. D. Kumaraswamy on Monday said the government is preparing to send a delegation of industry...