India’s EV supply chain gets a breather: China reportedly begins clearing rare-earth magnet export licences

Approvals are coming through Chinese suppliers for Indian and foreign-owned units; automakers had warned of production disruption after April 4 export restrictions.

China has started issuing licences to import rare-earth magnets (REMs) into India, government officials told Business Standard, in a move that could ease supply pressure on Indian automakers and component makers that had flagged disruption risks.

“Although it’s a slow start, China’s Ministry of Commerce has started processing and clearing the applications. Some companies have received necessary approvals. The process has now started,” one of the officials told Business Standard.

Government officials told Business Standard that approvals are coming through suppliers, including domestic companies as well as Indian units of foreign firms. Some of the companies cited include Jay Ushin, Indian units of German automotive component maker Continental AG, vendors of Mahindra, vendors of Maruti Suzuki, and suppliers of Honda Scooters and Motorcycles.

Maruti Suzuki and Mahindra and Mahindra declined to comment on Business Standard’s queries. Jay Ushin, Continental AG, and Honda Scooters and Motorcycles did not respond to emailed queries, the report said. Moneycontrol could not independently verify the report.

China dominates global production and capacity of rare-earth magnets, which are critical inputs for automobiles and auto components, electronics, the medical industry and defence. Beijing has subjected REMs to export restrictions since April 4, a step that has affected multiple countries, Business Standard reported.

The Indian automobile industry had raised concerns with the government, saying delays in approvals from China’s Ministry of Commerce were disrupting production schedules, including for electric vehicles.

Business Standard reported that China imposed export licensing norms in response to higher US tariffs on Chinese products. Under the rules, Chinese sellers will receive export clearance if importers can guarantee there is no dual-use of the materials or defence-related applications. Officials described the process as complicated and long-drawn.

Over the past six months, the Indian government has been in talks with Chinese authorities to address industry concerns about delayed processing of applications for critical raw material shipments, according to Business Standard. During a June visit to New Delhi, Chinese Foreign Minister Wang Yi promised External Affairs Minister S Jaishankar that Beijing would ease restrictions on exports of rare earth minerals, among other items, the report said.

Government officials told Business Standard that despite disruption and delays, the industry has been able to manage and has found ways to carry on production. The pace and breadth of approvals will now determine whether the easing is limited to a handful of applicants or becomes a broader reopening that reduces supply-chain uncertainty for India’s auto and EV makers.