India’s auto component industry is facing growing uncertainty as Chinese restrictions on rare earth magnet exports tighten, with the number of Indian companies seeking import licences from Beijing doubling in just two weeks, the Economic Times (ET) reported.
As of mid-June, 21 Indian firms, up from 11, have applied to China’s commerce ministry for permits to import medium and heavy rare earth magnets, ET said. This follows a directive issued by China on April 4, mandating exporters to obtain official clearance, including an end-user certificate from the buyer. The certificate must contain specific declarations, including that the materials will not be used in any form of weapons production.
Some of the Indian companies that have filed applications include Bosch India, Marelli Powertrain India, Mahle Electric Drives India, TVS Motor, and Uno Minda. Sona Comstar, which was earlier rejected on procedural grounds, has reapplied and is among those now awaiting Chinese approval, ET reported, citing a senior industry official.
According to data from the Society of Indian Automobile Manufacturers (SIAM), at least 52 Indian-based companies rely on Chinese magnets for supplying parts to the country’s automobile manufacturers. Most of them have completed the paperwork, obtained endorsements for their end-user certificates, and forwarded the documents to their Chinese suppliers. However, they are still awaiting the mandatory export licences from China’s commerce ministry.
Diplomatic efforts are underway, with Indian officials trying to engage Chinese authorities in dialogue, but progress has been slow, ET quoted sources as saying.
Meanwhile, countries like the US and some European firms appear to have moved faster. While the original Chinese directive was a response to US tariffs under the Trump administration, Washington has since secured a bilateral arrangement for rare earth magnet supply. European auto component manufacturers have also received clearances, but Indian firms remain stuck in the approval process.
Industry insiders fear that if licences are not granted soon, production lines could be disrupted. “While the value of imports compared to the industry size is minuscule, vehicles cannot be manufactured even if we are short of one component where a rare earth magnet is being used,” an executive told ET.
India imported 870 tonnes of rare earth magnets worth Rs 306 crore in 2024–25, and companies warn that existing inventories may last only until early July.
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