New Delhi: India’s automobile industry is on the brink of a significant disruption as Chinese restrictions on rare earth magnet exports threaten to bring vehicle production to a standstill by early June. Major automakers and industry groups have urged the Indian government to intervene immediately to avert the impending supply chain breakdown.
Rare Earth Magnet Shortage Could Halt Production
The Society of Indian Automobile Manufacturers (SIAM) has warned the Ministry of Commerce that several auto component suppliers may completely run out of rare earth magnet stocks by the end of May. This could force production lines to grind to a halt starting in June. The warning was conveyed during a high-level meeting held on May 19, attended by top officials from Maruti Suzuki, Mahindra & Mahindra, and Tata Motors.
Industry Seeks Urgent Government Intervention
SIAM has been pressing the government for several weeks to help facilitate the clearance of magnet shipments stuck at Chinese ports. The organization stressed that if swift action is not taken, the production slowdown could have far-reaching consequences on the auto industry and the broader economy.
Why Rare Earth Magnets Matter
Rare earth magnets are critical components used in electric vehicle (EV) motors, power windows, speakers, and other vital car parts. India relies heavily on imports from China for these materials. Under China’s new policy, companies must now submit detailed “end-use certificates” to prove that the magnets won’t be used for military applications. These documents must then be verified by the Chinese Embassy in New Delhi before an export license is issued.
SIAM Suggests Fast-Track Diplomatic Coordination
SIAM has proposed that the Indian government coordinate closely with the Chinese embassy and the Ministry of Commerce to ensure that approvals for these shipments can be granted within hours. This fast-tracking, they say, is essential to maintain the continuity of the country’s automotive manufacturing.
Sharp Decline in Imports
According to customs data, China’s export of permanent magnets to India fell sharply by 51% in April 2025, reaching just 2,626 tonnes. In FY 2023–24, India imported approximately 460 tonnes of rare earth magnets. That figure was expected to rise to 700 tonnes this year, with an estimated import value of $30 million.
Tensions with China Add to Uncertainty
Analysts warn that strained diplomatic ties between India and China could further delay the approval process. While China has reportedly approved certain shipments for automakers like Volkswagen, Indian companies remain in limbo.
The auto industry’s heavy reliance on China for critical components such as rare earth magnets has once again highlighted the urgent need for India to diversify its supply chains and boost local manufacturing capacity in strategic sectors. Unless immediate action is taken, the Indian automotive sector could face one of its most severe crises in recent years.
