Indian auto manufacturers may face production shutdowns within days due to China's export restrictions on rare earth magnets, according to industry sources and documents seen by Reuters. China, which processes over 90% of these magnets globally, implemented new rules in April requiring import permits—initially seen as a response to U.S. tariffs. However, the impact is now rippling across global automotive supply chains.
Indian firms, including Maruti Suzuki, Mahindra & Mahindra, and Tata Motors, participated in a May 19 meeting where SIAM warned that stocks would run out by the end of May. The magnets, crucial for both electric motors and conventional components like speakers and power windows, are being held at Chinese ports since April 4.
As per Reuters, SIAM and ACMA have asked the Indian government to expedite permits and push Beijing to release shipments. Complications include multi-step paperwork and the requirement for “end-use certificates,” verification by China’s embassy in New Delhi, and final approvals by Chinese authorities. The process is seen as too slow to prevent disruptions.
While some exporters, such as Volkswagen’s suppliers, have received export licenses, Indian executives remain concerned that strained diplomatic relations may delay approvals. China’s embassy stated it is facilitating legal trade under national security guidelines.
Customs data shows China's permanent magnet exports fell 51% in April year-on-year. India imported 460 tons in the previous fiscal year and expects 700 tons in 2025, valued at $30 million. Despite their low cost in a vehicle, missing even one magnet component can halt production lines.
SIAM recommends India fast-track applications and diplomatically press China for urgent processing. Neither the Indian ministries involved nor the automakers responded to Reuters’ requests for comment.