India’s EV Sector Faces Setback Amid China’s Export Controls on Rare Earth Magnets

India’s electric vehicle (EV) industry is facing a new challenge due to China’s recent export restrictions on rare earth magnets—critical components used in EV motors. The move is expected to disrupt supply chains, and if delays occur, production could be affected by the end of June once current stockpiles are exhausted.

The Society of Indian Automobile Manufacturers (SIAM) and leading automakers have approached the Ministry of Heavy Industries, urging it to engage with the Chinese government to streamline the import process for rare earth minerals. They have proposed that Indian importers be allowed to obtain advance approval to ensure uninterrupted supply from the same Chinese exporter for at least six months. This would help avoid the cumbersome process of securing clearance for each shipment, which is both time-consuming and inefficient.

Industry leaders are concerned that the new regulations could significantly hamper the import of magnets vital to the functioning of EV motors. Manufacturers have warned that supply delays caused by procedural hurdles could halt production once existing inventory runs out.

To address the issue, Indian and Chinese authorities are discussing the establishment of a standardized approval process. Under current rules, Indian importers must submit an End-User Certificate (EUC) confirming that:

• The materials will not be transferred to any third party without prior Chinese government approval.

• They will only be used for declared, peaceful purposes.

• They will not be stored, processed, or utilized for the development of weapons of mass destruction.

In a recent meeting, it was suggested that industry associations such as SIAM or the Automotive Component Manufacturers Association of India (ACMA) be nominated to verify EUCs and supporting documents. Following verification, the Ministry of Heavy Industries would forward the certified documents to the Ministry of External Affairs for final approval. Both ministries may also appoint a nodal officer to oversee the entire process.

These consultations between government agencies and industry stakeholders aim to find a practical resolution. China’s export control order, which took effect on April 4, applies globally and is seen by the U.S. as a retaliatory measure in response to increased tariffs.

The move is widely viewed as an attempt to restrict access to critical raw materials used in electronics, defense, and consumer goods. Given that China supplies approximately 90% of the world’s rare earth minerals, the new policy could have widespread global repercussions.