India’s Rare Earth Magnet Shortage: Navigating China’s Export Restrictions

India grapples with a critical shortage of rare earth magnets due to China’s tightened export controls, threatening its EV and electronics industries. Explore the role of rare earths, affected sectors, key players, and India’s strategies to secure its supply chain.

Introduction

India’s drive toward electric mobility and cutting-edge manufacturing faces a significant hurdle—not from economic slowdown or lack of demand, but from a scarce yet essential component: rare earth magnets. In April 2025, China, which supplies the majority of the world’s rare earth materials, imposed stringent export limits, disrupting India’s supply chain. With over 80% of India’s rare earth magnet imports originating from China, this restriction is creating ripples across the automotive, electronics, and renewable energy sectors. This article examines the significance of rare earth magnets, their applications, the impact of the supply crunch, key stakeholders, and India’s roadmap to mitigate this crisis.

Understanding Rare Earth Elements and Magnets

Rare earth elements (REEs) encompass a group of 17 metals, such as neodymium, dysprosium, praseodymium, and terbium, vital for advanced technology, renewable energy, and transportation. Among their most critical applications are neodymium-iron-boron (NdFeB) magnets, prized for:

• Exceptional strength relative to their compact size

• High energy efficiency

• Durability in demanding, high-temperature conditions

Why Rare Earth Magnets Matter to India

These powerful magnets are integral to permanent magnet synchronous motors (PMSMs) used in:

• Electric vehicles (EVs) and hybrid cars

• Wind turbine generators

• Electric two-wheelers and scooters

• Consumer electronics like smartphones and laptops

• Robotics, drones, and automated industrial systems

Even in traditional internal combustion engine (ICE) vehicles, rare earth magnets enable:

• Electric power steering systems

• Anti-lock braking systems (ABS)

• Fuel pump motors

• Infotainment and seat adjustment mechanisms

China’s 2025 Export Controls: A Game-Changer

In April 2025, China introduced rigorous export regulations, including:

• Mandatory export licenses for seven rare earth elements and finished magnets

• Requirements to disclose end-user information

• Prohibitions on using materials for defense purposes or re-exporting to the United States

These rules have extended approval timelines to at least 45 days, causing significant delays. Given India’s heavy reliance on Chinese imports, manufacturers face the risk of halted production lines and supply chain bottlenecks.

Sectors and Companies Hit Hardest

Automotive and EV Industry

• Tata Motors: Production of models like Nexon EV and Tiago EV is under strain.

• Maruti Suzuki: Output of its e-Vitara has dropped by nearly 70%.

• Mahindra & Mahindra: Electric models like XUV400 and commercial EVs face delays.

• Two-Wheeler Manufacturers: Ola Electric, Ather Energy, TVS Motor, and Bajaj Auto struggle to meet demand for electric scooters.

• Ashok Leyland: Electric bus production is impacted.

Consumer Electronics and Appliances

• Companies like Samsung, LG, Whirlpool, Godrej, Voltas, and Panasonic rely on rare earth magnets for motors in refrigerators, air conditioners, and washing machines.

Renewable Energy

• Firms such as Suzlon, ReNew Power, and Inox Wind depend on NdFeB magnets for wind turbine generators.

Defense and Strategic Applications

• Organizations like DRDO, ISRO, and Bharat Electronics Limited (BEL) require rare earths for radar systems, sensors, and aerospace technologies.

Indian Players in Rare Earth Processing

India possesses substantial rare earth reserves but lags in advanced refining and magnet production. Key entities include:

• IREL (India) Limited: A government-owned company under the Department of Atomic Energy, it extracts rare earths from monazite sands in Tamil Nadu, Odisha, and Kerala, producing basic rare earth compounds and expanding refining capabilities.

• Department of Atomic Energy (DAE): Oversees research and regulatory frameworks, collaborating with industries to enhance REE processing.

Global Partners for Supply Diversification

To counter the Chinese supply disruption, India is forging ties with international rare earth suppliers:

• Australia:

  • Lynas Rare Earths: A leading non-Chinese REE producer with a refining facility in Malaysia.

  • Arafura Resources: Advancing its Nolans project, focusing on neodymium and praseodymium.

• United States:

  • MP Materials: Operates the Mountain Pass mine, a major source of NdFeB materials.

  • Ucore Rare Metals: Developing REE separation technologies.

• Vietnam: A significant REE reserve holder, increasing exports to India.

• Japan:

  • Shin-Etsu Chemical: A global leader in rare earth magnet production.

  • Hitachi Metals: Specializes in bonded and sintered NdFeB magnets.

• Indonesia and Canada: Emerging as potential suppliers for India’s needs.

India’s Multi-Pronged Strategy

1. Government Initiatives

• Atmanirbhar Bharat: Promoting domestic REE refining and magnet production.

• International Agreements: Strengthening ties with countries like Australia and Vietnam.

• Production Linked Incentives (PLIs): Encouraging local sourcing in EV and electronics manufacturing.

2. Industry Collaboration

• Automakers, through the Society of Indian Automobile Manufacturers (SIAM), are accelerating alternative import channels and exploring non-Chinese suppliers.

• Partnerships with global REE firms for technology transfers and joint ventures.

3. Innovation and Alternatives

• Research at IITs and CSIR labs focuses on:

  • Developing ferrite magnets as substitutes

  • Using induction motors (as seen in some Tesla models) instead of PMSMs

  • Recycling rare earths from electronic waste and discarded magnets

4. Strategic Reserves

• Proposals are underway to establish a national rare earth stockpile, similar to India’s crude oil reserves.

Can India Achieve Rare Earth Independence?

India holds approximately 35% of the world’s monazite reserves, primarily along its southern and eastern coasts. However, the challenge lies in mastering the complex processes of REE separation, purification, and magnet manufacturing. With sustained investment, private-sector participation, and global collaborations, India can build a robust rare earth ecosystem.

Conclusion: Seizing the Opportunity

China’s export curbs have highlighted India’s vulnerability in critical mineral supply chains but also opened doors for transformation. By fostering domestic capabilities, securing international partnerships, and driving innovation, India can turn this crisis into a catalyst for self-reliance and industrial growth. The coming months will be pivotal, not only for India’s EV ambitions but also for its strategic and economic resilience in a resource-constrained world.