India seeks steady rare earth magnet supply

New Delhi

India is working with electric vehicle (EV) makers to ensure a steady supply of rare earth magnets, which are critical components for EV motors and electric steering systems. A Crisil Ratings report released Tuesday said the country is actively exploring supply diversification amid China's export restrictions and delays in shipment approvals.

Though rare earth magnets account for less than 5% of a vehicle’s cost, they are vital for performance. China, which supplies over 80% of India’s magnet imports, has imposed new export rules requiring detailed end-use disclosures. This has led to approval delays of at least 45 days, severely affecting global supply chains.

To address the issue, Indian automakers and the government are acting on two levels. In the short term, they're building strategic reserves, seeking alternative suppliers in countries like Vietnam, Japan, and the US, and speeding up domestic assembly under Production Linked Incentive (PLI) schemes.

For the long term, plans include ramping up local exploration, production, and recycling of rare earth materials to reduce dependency on imports.

“Prolonged supply delays may affect EV launches and production starting July,” said Anuj Sethi, Senior Director, Crisil Ratings. Most companies currently hold 4–6 weeks of stock, but with 30 Indian import requests still pending Chinese approval, the pressure is mounting.

If restrictions continue, rare earth magnets might be redirected to internal combustion engine (ICE) vehicles, which need fewer magnets, potentially slowing India’s EV transition.

India’s auto sector, with over a dozen new EV models planned, now faces a crucial test in securing essential components.