Electric Vehicles

Auto Industry Seeks Govt Help As China’s Export Curbs Threaten EV Supply Chain

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India's automobile sector is pressing the government to speed up the import process for rare earth magnets from China, crucial for electric vehicles (EVs), amid new export restrictions. These regulations demand special licenses and an end-user certificate from the Indian government, complicating approvals. With China controlling over 90% of global processing for these materials, industry experts warn of potential production disruptions similar to those experienced by Suzuki in Japan.
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Auto Industry Seeks Govt Help As China’s Export Curbs Threaten EV Supply Chain

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India’s automobile industry is urging the government to expedite formalities needed for importing rare earth magnets from China, as mounting export restrictions threaten to derail production, especially in the electric vehicle (EV) segment.
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Industry insiders say several Indian suppliers have already initiated the approval process through their Chinese partners, but have yet to receive the green light from Beijing. The rare earth magnets—critical for EV motors, braking systems, and steering components—are now subject to new Chinese regulations that require special export licences. The curbs came into effect on April 4.
China currently controls over 90% of the global processing capacity for these strategic materials. The restricted items include essential elements such as samarium, gadolinium, terbium, dysprosium, and lutetium—key ingredients not only in electric mobility but also in smartphones, renewable energy devices, and even defence applications.
Maruti Suzuki India’s senior executive Rahul Bharti recently confirmed that the Chinese government now demands an “end-user certificate,” signed by the Indian government and approved by Chinese authorities. “That process is ongoing and the industry is in active discussions with the government,” Bharti said.
The ripple effect of the export restrictions is already being felt. In Japan, Suzuki Motor has temporarily halted production of its Swift model due to supply constraints. Industry experts warn that India could face similar disruptions if approvals aren’t granted soon.
“The curbs represent a significant supply chain risk,” said Rajat Mahajan, Partner and Automotive Sector Leader at Deloitte India. “Rare earth magnets are crucial for EV motors, which form the core of electric powertrains. So far, alternative magnetic materials have not proven commercially viable at scale.”
The shortage not only jeopardises production timelines but could also lead to rising costs. “Inflationary pressure is likely due to higher prices for the limited supply available,” said ICRA’s Senior Vice President Srikumar Krishnamurthy. “Disruptions could intensify if OEMs don’t receive a stable supply of magnets.”
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Complicating matters further is the lack of recycling potential. According to Mahajan, the volume of used rare earth magnets currently available for recycling is insufficient to meet EV production needs, leaving manufacturers with few immediate alternatives.
While automakers are exploring ways to reduce dependence on Chinese imports, experts caution that any transition to alternate materials or technologies will require significant time and R&D investment. Until then, industry stakeholders are pinning hopes on swift diplomatic intervention to ease export bottlenecks and prevent production standstill.
(With inputs from PTI)

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