Rare-Earth Magnet Shortage Could Disrupt India’s EV Production By Mid-July: ICRA

New Delhi, Jun 13 (KNN) India’s automotive industry confronts a severe supply crisis as inventories of rare-earth magnets essential for electric vehicle production and critical automotive components are projected to run dry by mid-July, according to credit rating agency ICRA. 

The shortage threatens to disrupt vehicle manufacturing, particularly in the rapidly expanding electric vehicle segment.

China’s implementation of stricter export controls has created significant supply bottlenecks for Indian manufacturers. 

The country sources approximately 85 percent of its rare-earth magnet imports from China, making the automotive sector vulnerable to these regulatory changes. 

Chinese authorities introduced new licensing requirements and intensified inspections beginning in April, resulting in substantial shipment delays and prolonged customs clearance processes.

Jitin Makkar, Senior Vice President and Group Head, Corporate Ratings, ICRA, characterised the situation as a serious concern for the industry. 

He emphasised that rare-earth magnets, particularly neodymium-iron-boron compounds, are indispensable components for high-efficiency traction motors and advanced automotive systems. 

The urgency of the situation has made contingency planning a critical priority for manufacturers.

Credit rating agency Crisil has similarly identified this disruption as a significant risk to automotive supply chains. 

The agency estimates that unresolved supply issues could affect six to seven percent of quarterly electric vehicle production if the crisis persists beyond the next two months.

India imported approximately USD 200 million worth of rare-earth magnets during the 2024-25 fiscal year, with the majority utilised in automotive and industrial applications. 

In electric two-wheeler manufacturing, rare-earth magnets represent nearly 30 percent of motor costs, with motors typically priced between Rs 8,000 and Rs 15,000.

The current shortage has renewed advocacy for establishing domestic capabilities in rare-earth processing and advanced magnet manufacturing. 

While India possesses rare-earth mineral reserves, the country lacks large-scale refining and separation infrastructure necessary for producing high-performance magnets such as neodymium-iron-boron compounds.

(KNN Bureau)

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