China’s recent export restrictions on rare earth magnets have sent ripples through the global automotive industry. India, with its growing automotive manufacturing base, is particularly vulnerable due to its heavy reliance on imports of these critical components.

Rare earth magnets—vital for electric vehicles (EVs), power steering systems, power windows, and infotainment modules—are at the heart of modern car technology. With China controlling over 90% of global processing capacity for these magnets, the repercussions of these restrictions are immediate and severe for Indian manufacturers.

🚨 Urgent Threat to Indian Auto Manufacturing

The Society of Indian Automobile Manufacturers (SIAM) has raised alarm bells, stating that production could come to a standstill as early as late May or early June 2025 if the issue isn’t resolved. The reason is simple: inventory levels are dangerously low and without fresh imports, production lines may grind to a halt.

While reports suggest that some imports have resumed due to India issuing compliance certificates, the underlying risks of geopolitical instability remain. The process to import these magnets is convoluted, involving multiple ministries, and often requires non-military use certifications acceptable to Chinese authorities.

📊 Key Data on Rare Earth Magnet Imports and Dependency

Indicator	Details
China’s share in global rare earth magnet processing	Over 90%
India’s import of rare earth magnets (FY 2023-24)	460 tons from China
Projected import volume (FY 2024-25)	~700 tons
Estimated import value for FY 2024-25	~$30 million
Inventory status with Indian auto parts makers	Likely to be exhausted by end of May 2025
Risk timeline for production stoppage	Late May to early June 2025, without import resolution
Regulatory requirement for imports	Multi-ministry clearance & Chinese compliance including non-military usage

🇮🇳 India’s Broader Manufacturing Capability: Strength vs Vulnerability

Despite this setback, India’s overall manufacturing sector has demonstrated impressive resilience and diversification. Here’s how India stands in various sectors:

Sector	Highlights
Automobile	– 4.4M+ passenger vehicles & 2M commercial vehicles produced (2022-23)
	– 1.6M vehicles exported in 2022
	– EV growth boosted by FAME scheme
Electronics	– PLI scheme drives growth; sector targets $300B by 2026
	– Mobile phone production alone may exceed $100B
Pharmaceuticals	– Supplies 20% of global generics
	– $24.5B exports in 2021–22
Textiles & Apparel	– Second-largest global producer
	– Accounts for ~11% of India’s exports
Steel & Iron	– 2nd largest producer of crude steel (>100M tons annually)
	– Strategic goal of self-sufficiency
Food Processing	– Leverages top-tier agricultural output
	– Rapid growth in cold storage & processing infrastructure

🧩 Strategic Takeaways

• Supply Chain Diversification is Imperative: This situation underscores the risk of over-dependence on a single country for critical components.
• Policy Intervention Needed: SIAM’s call to the Indian government for diplomatic intervention is timely and necessary.
• Opportunity for Domestic Innovation: India should accelerate R&D and investment in alternative sources or domestic manufacturing of rare earth magnets.
• Geopolitical Risk Management: As global trade becomes more politicized, Indian manufacturers must prepare with risk-mitigation strategies.

🔚 Conclusion

While India’s industrial foundation is robust, the rare earth magnet crisis is a stark reminder of how vulnerable critical sectors can be to geopolitical turbulence. Swift diplomatic and industrial policy responses are essential to avoid a major disruption in the automotive sector—and to build long-term resilience in India’s supply chains.