China has started issuing export licences for rare earth magnets. This move brings timely relief to Indian automakers. And it stabilises supply chains just as EV demand surges ahead
China dominates the global scene. It controls over 90 per cent of rare earth processing. Moreover, it holds nearly all high-performance magnet production. Rare earth elements power permanent magnets. These magnets drive electric motors in EVs and hybrids. However, trade tensions sparked rare earth export curbs earlier in 2025. Controls began in April. They tightened further in October. Yet, diplomatic efforts shifted the tide.
Recently, China approved general licences. Suppliers now ship rare earth magnets smoothly. And shipments rose 13 per cent in November alone. For India, this change matters hugely. The auto industry relies on China for 80-85 per cent of rare earth permanent magnets. Earlier rare earth export curbs caused delays. Production lines faced risks. EV makers like Tata and Mahindra felt the pinch. Component firms warned of disruptions.
Also Read: Auto Industry in Crisis: Rare Earths Shortage Sparks Panic
Now, licences flow to Indian buyers. Vendors for Maruti Suzuki and others gain access. Thus, inventories rebuild quickly. Costs stabilise soon. And EV rollout accelerates without hiccups.
Stabilising Supply Chains Amid Growth
India’s auto sector booms. EV sales climb fast. Targets aim for 30 per cent penetration by 2030. Rare earth magnets prove essential. They enable efficient motors. However, rare earth export curbs exposed vulnerabilities. Firms stockpiled materials. Some redesigned parts. Yet, delays loomed over output.
The easing changes everything. Shipments resume for civilian use. China clarifies controls target no specific country. Applications for non-defence needs clear swiftly. Therefore, Indian firms breathe easier. Production continuity holds firm. Moreover, prices ease from peaks. Automakers avoid passing hikes to buyers.
Benefits extend wider. Jobs stay secure in component units. Exports of Indian vehicles grow. And renewable ties strengthen indirectly. However, challenges linger. Licences demand detailed end-use proof. Delays persist in some cases. Firms diversify sources anyway.
Accelerating India’s Self-Reliance Drive
Government steps gain momentum. A Rs 7,280 crore scheme promotes local magnet production. Incentives draw investments. Moreover, recycling efforts rise. Firms recover neodymium from waste. Thus, domestic capacity builds steadily.
EV adoption surges ahead. Two-wheelers lead the charge. Four-wheelers follow close. Rare earth export curbs taught hard lessons. Now, easing provides breathing space. Companies invest in ferrite alternatives. R&D explores non-rare earth motors. And partnerships scout Vietnam or Australia.
Policy aligns with Atmanirbhar goals. Localisation mandates relax temporarily. Yet, long-term focus sharpens on resilience.
Hidden Risks in Temporary Easing
Deeper analysis reveals nuances often overlooked. China introduced general licences post trade talks. However, core April controls remain intact. Case-by-case approvals continue for heavy rare earths. Defence-linked requests face automatic rejection. And Beijing retains full leverage.
India secures civilian flows now. Yet, no full rollback occurs. Sources note licences speed shipments but preserve controls. Extraterritorial rules hover paused. They could resume post-2026. Moreover, China processes 89 per cent globally. Mining dominance adds layers.
Few reports highlight this. Easing ties to US truce primarily. India benefits indirectly via diplomacy. However, approvals favour non-military uses explicitly. Indian defence auto ties risk future scrutiny. Additionally, magnet demand hits 6,000 tonnes yearly by 2026. Local output lags far behind.
Thus, relief feels temporary. Firms must hasten diversification. Government schemes need swift rollout. Or, next tensions could choke supplies again. India eyes stable chains. Yet, China’s grip underscores urgency for true independence.
