The Indian automobile industry has urgently requested government intervention to resolve pending approvals from Chinese authorities for importing rare earth magnets. These critical components power electric motors and various automotive applications across the manufacturing sector.
China controls over 90% of the world's rare earth magnet supply, making these restrictions particularly concerning for Indian manufacturers. Several Indian suppliers have applied for approvals through their Chinese partners, but no permissions have been granted yet.
Since April 4, the Chinese government has imposed restrictions requiring special export licenses for seven rare earth elements and related magnets. The restrictions affect crucial automotive components, including electric motors, speedometers, e-axles, and automatic transmission kits used in modern vehicles.
"China has requested an end-user certificate, which must be endorsed by the Indian government and approved by Chinese authorities," said Maruti Suzuki's Senior Executive Officer Rahul Bharti. "That process is ongoing and industry is in discussion with the government," he added.
Multiple Indian auto suppliers are now waiting for Chinese approval through their local partners. The industry faces mounting pressure as zero approvals have been granted so far, creating significant supply chain bottlenecks for manufacturers.
Deloitte India's Automotive Sector Leader Rajat Mahajan describes this shortage as a significant supply chain disruption, particularly affecting electric vehicle production. Rare earth magnets possess unique properties that make them essential for EV manufacturing processes.
"This has been an R&D topic for the automotive industry for long, but other magnetic materials haven't seen large-scale commercial usage," Mahajan explained. There aren't enough rare earth magnets available for recycling to meet current EV production demands across the industry.
Automakers cannot quickly shift to different powertrains or alternative materials, creating additional challenges for production planning. "This situation will hopefully get resolved via diplomatic channels, but if it continues, we may see powertrain shifts for large manufacturers," he noted.
Icra's Senior Vice President Srikumar Krishnamurthy emphasized that rare earth magnets are essential in electric motors and regenerative braking systems. The restrictions could lead to inflationary pressures and production schedule disruptions across the automotive sector nationwide.
These rare earth materials include critical elements such as samarium, gadolinium, terbium, and dysprosium. The elements are used not only in electric vehicles but also in smartphones and missile technology applications worldwide.
While carmakers are exploring ways to reduce dependence on Chinese supplies, finding immediate alternatives remains challenging. The restrictions highlight India's vulnerability in critical supply chains for emerging technologies and electric vehicle production requirements.
The automotive industry hopes diplomatic channels will resolve the current crisis between the two nations. Government intervention remains crucial for securing approvals and maintaining production schedules across Indian manufacturing facilities.