Over 90% of rare earth magnets are processed in China, widely used in key automotive components like electric motors and speedometers. With China tightening its rare earth supply, India's auto industry faces supply chain disruptions. According to the India Times, the industry is urging the New Delhi government to expedite the approval for rare earth and magnet imports from China, as the country's export restrictions directly affect the production of electric vehicle components.

Since April 4, China has implemented export controls on seven critical rare earth elements and associated magnets, requiring companies to apply for special export permits. Several Indian suppliers have applied for permission through local partners in China, but none have yet received approval. Rajat Mahajan from Deloitte India highlights that this shortage of rare earth magnets will significantly disrupt the supply chain, particularly impacting the production of electric vehicles.

With prices for high-performance magnet materials soaring and the overall supply environment tightening, this situation could further drive up automobile production costs, affecting the entire industry. The industry hopes that diplomatic efforts can resolve this dilemma and mitigate further disruptions to production plans.