India could slash value addition rules in desperate counter to China’s magnet blockade

File picture of rare earth magnet production
| Photo Credit:
Doug Kanter

If China’s stranglehold on supply of rare earth magnets, a critical component in EV-making, does not loosen over the next few days, India may water down its domestic value addition norms and greenlight import of full assemblies in the sector. Sources said this would be a last-ditch fall-back option, if things don’t go according to plan.

At a recent high-level meeting, line ministries discussed the possibility of import bills rising if full assembly imports are allowed. Even flagship manufacturing schemes will see possible delays.

Sources told businessline, automakers are stuck — their visas are yet to be cleared, no meetings have been finalised with China’s Commerce Ministry, and approvals for a dozen-odd companies that want to bring in the rare earth magnets, are yet to be cleared by the Chinese.

Redesigning components could take a gruelling six months to a year, it was told during the meeting.

“The industry will be constrained to import complete assemblies of components from China in the short term. This may lead to local manufacturers (of auto components) of motors, sensors and other components, who use rare earth magnets, losing business to the Chinese, and/ or the auto industry witnessing a rise in higher cost imports. But, this would be an extreme last option,” the official said, requesting anonymity.

Over 35 companies in India, including Brakes India, Kyocera Avx Components, Hitachi Astemo Chennai Private Ltd, Continental Automotive, Minda Instruments, Sona Comstar, Uno Minda, and Varroc Engineering, source rare earth magnets from China and supply them to OEMs (original equipment makers).

Nearly half of theses companies – 10–12-odd – have “commenced the process of seeking end-user certificates,” while some end-user certificates have been “endorsed by the Chinese Embassy”. Some of the names discussed include Bosch India, Brose Automotive Systems, Continental, Hitachi Astemo, and Yantai Dongxing Magnetic Material, among others.

Sona Comstar is the only company whose application was rejected, sources said.

Rare earth magnet stocks, according to government analysis, could suffice till the end of this month; private consultancy firms estimate these could last till July 15.

China imposes export curbs on rare earth magnets

In April, China imposed export curbs on rare earth magnets, seeking guarantees that the material will be utilised for civilian usage and will not be used to make defence equipment. Restrictions were also placed on seven key minerals that are required to make rare earth magnets.

The certification process, post-approval from the DGFT and MEA, will include verification and stamping of the end-user certificate by the Chinese Embassy in India. The importer would send certificates to the exporter in China.

India’s rare earth magnet imports stand at 3,600 tonnes (as a country); the auto industry imports approximately 870 tonnes.

Line ministries say companies such as Tata, Mahindra, Maruti, Kia, Hyundai, Toyota, Bajaj, TVS, Hero Motocorp, Volvo Eicher and Ashok Leyland could see disruptions.

Rare earths are used in making e-axles for EVs, position detection engines, wheel speed sensors, brake stroke sensors, automatic gear shifting kits, oxygen sensors (exhaust), audio speakers and speedometers, ignition coils (for engine ignition purposes), electric water pumps (for engine cooling), and election power steering.

Published on June 14, 2025

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