Hero Moto, Bajaj Auto, M&M, TVS Motor rise up to 2% as China may ease rare earth access for OEMs

In 2023, India imported $13.1 million worth of rare earth compounds, ranking 17th globally, despite having the fifth-largest reserves of rare earth metals, at an estimated 6.9 million metric tonnes.

Shares of leading auto players—including Bajaj Auto, Hero MotoCorp, M&M, Tata Motors, and TVS Motor—rose as much as 2 percent on the morning of June 11, after reports suggested that China may grant rare earth licences to Indian auto component manufacturers.

If confirmed, the move could offer significant relief to automakers, particularly those in the electric vehicle space. Several companies had recently flagged production challenges and rising input costs due to supply constraints in rare earth materials, critical for EV motors. The potential easing of this bottleneck comes as a timely breather for the industry grappling with cost pressures and production risks.

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Rare earths, a group of elements used in everyday technologies like smartphones and EVs, are difficult and expensive to extract and process—and their production often comes with significant environmental costs.

China tightened export controls on these magnets, a move seen as part of its strategic counter to US-led trade pressure under Donald Trump's administration.

"With China accounting for nearly 90 percent of global magnet output, finding substitutes is neither easy nor quick. Alternatives from Malaysia, Vietnam, or Australia lack both scale and cost competitiveness. Testing and validation of new sources could take years," Shrirdhar Kallani of Axis Securities told Moneycontrol.

Also read: India’s EV push could face a massive jolt from China's rare earth magnets curb

Earlier this week, Commerce Minister Piyush Goyal, while speaking in Bern, Switzerland, said that the Indian government is actively exploring alternatives, including diplomatic efforts and the development of new supply chains. According to Goyal, the Indian embassy is already in discussions with Chinese authorities on the matter, and the commerce ministry is engaged as well.

In 2023, India imported $13.1 million worth of rare earth compounds, ranking 17th globally, despite having the fifth-largest reserves of rare earth metals, at an estimated 6.9 million metric tonnes. Yet, actual production stood at a mere 2,900 metric tonnes last year. This mismatch underscores a long-standing vulnerability: a domestic supply chain that simply doesn’t exist.

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