China’s one decision cause uproar in world! stops supply of…, disrupts Indian businesses like Ratan Tata’s…, Anand Mahindra’s…

According to media reports India’s auto sector imported 460 tons of rare earth magnets in FY25 and most of it was from China.

India’s electric vehicle (EV) industry is facing a supply chain crisis due to a shortage of a critical component which is rare earth magnets. These magnets are important components in electric vehicle motors and are used in various essential parts like electric motors, power windows, speakers, and other auto parts. They are also used in everyday technologies like smartphones and EVs.

India heavily depends on China for rare earth magnets. However, China has imposed restrictions on the export of rare metals which has disrupted India’s EV business. This decision is taken at the time when the Indian government is promoting domestic EV production. It’s also encouraging e-mobility by giving incentives and funding in the 2025 budget. Producing these components in India is challenging, expensive and it also impacts on the environment.

Why Has China Imposed Restrictions?

China’s decision is called as response to U.S. restrictions on Chinese technology especially in the semiconductor sector. According to Reuters, this move shows China’s dominance in critical mining industries. It is in a trade war with the U.S. under former President Donald Trump’s policies, China is also trying to block US businesses as much as possible.

China’s ban on rare earth magnet exports has affected the supply chains of automakers, aerospace manufacturers, semiconductor companies, and military contractors in the world.

Impact On India

According to an Economic Times report, India imported 870 tons of magnets of Rs 306 crore in FY2025. China controls around 70% of the rare earth magnet market and which is about 90% of production. Vehicle manufacturers may pass on the increased costs to consumers, if  prices rise due to this move by China. The Society of Indian Automobile Manufacturers (SIAM) has raised concerns with the government and stated that the shortage of magnets can lead to production delays.

The Indian government is reportedly sending a delegation of automotive industry leaders to Beijing to find solutions. SIAM recently shared a document stating, “The shortage could halt automotive production entirely starting early June.” As its impacting Ratan Tata’s Tata Motors, Maruti Suzuki and Anand Mahindra’s Mahindra & Mahindra. This document was presented during a May 19 meeting attended by officials from Maruti Suzuki, Mahindra & Mahindra, and Tata Motors.

While China has approved exports for some magnet producers like Volkswagen, Indian auto industry officials fear that due to relations between Beijing and New Delhi they might delay approvals for Indian companies.