Rare earth magnet crisis: India's auto sector to head to Beijing for talks

Indian auto leaders to meet Chinese officials next week, aiming to resolve rare earth magnet export delays that threaten electric vehicle production and supply chain stability

The Indian automotive sector is gearing up to send a high-level delegation to China next week to tackle mounting concerns around delayed imports of rare earth magnets, according to a report in The Economic Times.

 

The delay stems from China’s new export restrictions on rare earth materials, which took effect on April 4. These regulations have introduced procedural hurdles, causing significant shipment bottlenecks for Indian manufacturers, the news report said.

 

Several shipments of rare earth magnets — vital components used in electric motors and other automotive parts — are reportedly stranded at Chinese ports. This disruption has sparked worries about potential production halts as early as the first week of June.

   

Joint industry delegation to engage Chinese officials

 

A joint delegation comprising representatives from the Society of Indian Automobile Manufacturers (Siam) and the Automotive Component Manufacturers Association (Acma) is set to meet with senior Chinese government officials. Their goal is to accelerate the approval process and restore the steady flow of these critical imports, the news report said.   

 

  At the same time, India’s commerce and external affairs ministries are collaborating closely with the Indian embassy in Beijing to facilitate these high-level discussions.

 

China remains the dominant player in the rare earth supply chain, accounting for around 70-80 per cent of global rare earth processing and over 90 per cent of rare earth magnet production. This makes Indian automakers and component manufacturers heavily reliant on Chinese imports.

 

Industry experts warn that any further delay could have severe repercussions on vehicle production, especially in the fast-growing electric mobility segment, the news report said.

 

Urgent calls for government intervention

 

With inventories rapidly depleting, Siam and Acma have been working closely with India’s commerce ministry. As reported by Reuters on May 29, Siam alerted government officials that component makers’ stocks could run out by the end of May. They urged urgent intervention at the highest level, including from the Prime Minister’s Office.   

 

  The upcoming delegation to China will reportedly include representatives from leading original equipment manufacturers (OEMs) and component suppliers, particularly those specialising in motor manufacturing.

 

Ministry plans meeting to boost production

 

Amid tightening supplies of rare earth magnets from China, the Ministry of Heavy Industries has scheduled a meeting with key stakeholders on June 3 to finalise a concept note aimed at encouraging domestic manufacturing of these magnets.

 

The proposed plan will include targeted financial incentives for companies entering this space, promote a public-private partnership framework to establish rare earth metal processing and magnet production facilities within India, and focus on identifying and partnering with alternative international suppliers to lessen the country’s heavy reliance on China.

 

The initiative follows a recent meeting held on Wednesday between senior ministry officials and representatives from the automotive industry. During the discussion, industry participants raised concerns over rapidly depleting inventories of rare earth magnets. Many warned that if imports from China are not restored promptly, several factories — including those producing electric vehicles and traditional internal combustion engine (ICE) vehicles — may be forced to shut down.