China Rare Earth Export Controls Hit Indian Auto Industry

Increasing Pressure on Makers.

The tightening of rare earth metals by China has affected the supply of the metals to the automobiles industry in India. Automakers such as Royal Enfield are reducing unnecessary parts, which reveal India's overreliance on Chinese exports.

China's Export Restrictions

China has not banned it, but put bureaucratic obstacles to approvals. The most important ones are the neodymium, dysprosium, and terbium , essential to EV motors and sensors.

Impact on Vehicle Manufacturing

• Royal Enfield eliminated the gear position sensors with rare earth magnets.
• Other companies had to redesign cars in order to reduce non-essential items.
• Lackages accentuate the stress on global supply chains.

Rising Demand in India

• Consumption of permanent magnets increased by 28,700 tonnes (FY24) compared to 12,400 tonnes (FY21) .
• Imports increased by 88 percent in FY25 and stood at 53,700 tonnes .
• The increase in EV prompts the need of neodymium-iron-boron magnets that are lighter and stronger.

Domestic Limitations

India IREL (India) Ltd manufactures rare earth oxides but does not have high processing capacity to manufacture alloys and magnets. The nation still is reliant on Chinese refiners , who are the leaders in efficient magnet production.

Geopolitical Context

The limitations are associated with the trade conflict between China and the US . India is also in negotiations with China to facilitate approvals but there is uncertainty in supply schedules.

Strategic Implications

EVs and high-tech industries are dependent on rare earth metals . The result is shortages that jeopardize the cost and rate of production. India must:

• Expand domestic processing capacity
• Import diversification not only China.
• Strengthen international supply partnerships