China’s restrictions on rare earth material exports have created serious challenges for India’s electric vehicle (EV) industry and the question that arises is that what is the way forward for India?
These rare earth elements are critical for making EV components like magnets, which power electric motors.
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| Curbs on rare earth materials could delay the EV ambition of India -- Photo: Class Central. |
India, currently dependent on Chinese imports for these materials, may face delays and rising costs in its journey to becoming an EV powerhouse.
Why are rare earths important for EVs?
Rare earth elements such as neodymium and dysprosium are essential in producing strong permanent magnets.
These magnets are small but vital components used in electric motors of EVs, wind turbines, smartphones, and even military equipment.
India imported around 870 tonnes of rare earth magnets in FY25, worth Rs 306 crore.
These magnets are mostly sourced from China, which dominates the global supply chain — from mining to refining and exporting.
Why did China restrict rare earth exports?
China’s decision is largely seen as a response to trade restrictions imposed by the United States on Chinese tech, especially the semiconductor industry.
By tightening control over rare earth exports, China is signalling its leverage in global technology and clean energy sectors.
According to a News Agency, the move is part of a broader trade strategy by China amid growing tensions with the US.
Although India is not the direct target, it has become a victim of collateral damage in this global trade battle.
How will India’s EV industry be affected?
India’s EV goals are closely tied to the availability of critical components like rare earth magnets.
The government has been promoting EV manufacturing through tax breaks and incentives in Budget 2025.
However, without a stable supply of rare earth materials, production timelines may get delayed.
Currently, Indian auto manufacturers importing magnets from China must submit end-use declarations.
These are forwarded for approval to the Chinese Embassy, making the process slow and uncertain. As of now, around 30 applications from Indian firms are pending Chinese clearance.
Industry reaction is worry and urgency
The Society of Indian Automobile Manufacturers (SIAM) has expressed concern to the Indian government.
It fears that without quick solutions, low inventory levels may halt or slow down EV production.
To tackle the issue, the Indian government is considering sending a delegation of auto industry leaders to Beijing.
The goal is to negotiate and ensure that exports for critical components continue without major disruptions.
What can India do next?
This situation highlights the need for India to reduce its dependency on Chinese imports.
Some potential steps include:
Developing domestic rare earth mining and refining capacity
Exploring alternative suppliers like Australia or the US
Investing in magnet recycling and circular economy initiatives
Encouraging research and development in alternatives to rare earth-based magnets
E-Vroooom’s views
It is a wake-up call for India’s EV mission. China’s export curbs have brought India’s EV challenges into sharp focus.
While short-term disruptions are likely, this could also be a turning point.
If India accelerates its efforts in self-reliance and supply chain diversification, it can emerge stronger and more resilient in the long run even if China restricts rare earth exports for India’s electric vehicles.
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