China’s Rare Earth Export Curbs Threaten India’s Electric Vehicle Ambitions
India’s EV Sector Faces Headwinds as China Tightens Rare Earth Exports
India’s push for electric vehicles (EVs) has hit a roadblock as China, the dominant player in the rare earth industry, has imposed curbs on the export of these critical components. Rare earths, including alloys, mixtures, and magnets, are essential for EV production and are difficult and expensive to extract.
What’s Behind China’s Decision?
China’s move is seen as a response to US restrictions on Chinese technology, particularly in the semiconductor industry. The curbs also underscore China’s dominance in the critical mineral industry and are viewed as leverage in its ongoing trade tensions with the US.
Impact on India’s EV Ambitions
India relies heavily on imports for rare earth magnets, a vital component for EV production. In FY25, the country imported 870 tonnes of these magnets valued at ₹306 crore. China’s export curbs have disrupted global supply chains, and Indian automakers may face increased costs, potentially rising by up to 8%.
Key Concerns for the Indian Auto Sector
- Lower magnet inventories may cause production delays
- Indian vehicle manufacturers must self-declare magnet end-use, facing a lengthy approval process through the Chinese Embassy
- About 30 applications are pending Chinese clearance
Government and Industry Response
The Society of Indian Automobile Manufacturers (SIAM) has raised concerns with the government, highlighting the potential impact on production. The Indian government, which has been actively promoting the EV sector through incentives and budget allocations, will need to navigate this challenge to keep its EV ambitions on track.
Future Developments and Takeaways
As the situation unfolds, Indian automakers may need to explore alternative sources or develop new technologies to mitigate the impact of China’s export curbs. The Indian government’s response and the industry’s adaptability will be crucial in determining the future of India’s EV sector.
