India’s Electric Vehicle Ambitions Face Setback Amid China’s Rare Earth Magnet Export Restrictions

India’s big push into electric vehicles (EVs) is running into a serious roadblock, and it’s all about magnets. Not just any magnets, but rare earth magnets that power the heart of EV motors. China, which dominates the global supply of these, has tightened the rules on who can purchase them, and that’s bad news for India’s growing electric vehicle (EV) industry.

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What’s China Doing, and Why Does It Matter?

As of April 4, 2025, China rolled out strict export controls on rare earth magnets. Now, any importer must jump through several hoops, including obtaining licenses and submitting detailed paperwork that demonstrates where the magnets will be used. These forms even need a stamp of approval from the importer’s foreign ministry and the Chinese embassy. China says it's to make sure the materials don’t end up being used for military purposes or resold elsewhere.

The result? Thousands of applications from around the world, including those from India, are currently pending. Automakers and diplomats are growing increasingly impatient, pushing Beijing to expedite the process.

What This Means for India's EV Industry

India’s electric vehicle market has been gaining real momentum thanks to government support and rising consumer interest. But here’s the catch: Indian companies rely heavily on Chinese rare earth magnets to build EV motors and power steering systems.

Big names like Tata Motors, Mahindra & Mahindra, and Olectra Greentech could face production slowdowns. Even parts makers like Schaeffler India and Sona BLW are feeling the pressure. So far, nine Indian suppliers have gotten some green light from China’s embassy, but they’re still waiting on the final go-ahead from China’s commerce ministry.

This Isn’t Just India’s Problem

It’s not just India that’s feeling the heat. Auto giants in Germany, the U.S., and Japan are also sounding the alarm. These magnets are used far beyond electric vehicles; they’re critical for electronics, aerospace technology, defense systems, and even semiconductors. The longer the delay, the more global production gets squeezed.

That’s why diplomats and automakers around the world are now putting pressure on China to move faster before entire industries come to a halt.

How Is India Responding?

India isn’t sitting still. The government is exploring ways to reduce its reliance on Chinese supplies. One big step? Boosting domestic production. IREL (India) Limited, a government-backed company, has opened a plant in Visakhapatnam that makes samarium-cobalt magnets using homegrown tech.

The catch? That plant produces only about 3,000 kg a year, nowhere near enough to meet India’s expanding EV needs. Experts say it’s time for serious investment in R&D and a full-scale ramp-up of rare earth processing and magnet-making capabilities.

Bottom Line

China’s export rules have thrown a wrench into India’s electric vehicle (EV) plans, highlighting just how fragile the current supply chain really is. But it’s also a wake-up call and maybe even an opportunity. If India can increase its domestic production and establish new partnerships, it could emerge stronger, more independent, and better prepared for the EV future.