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Explained: How China's Rare Earth Magnet Export Curbs Could Hit India's Bajaj Auto, TVS Motor
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China's rare earth magnet export curbs: After Bajaj Auto's warning, TVS Motor fears production hurdles and price hikes
China's Rare Earth Magnet Export Curbs: India's two-wheeler electronic vehicle EV is gearing up for a new supply chain turbulence, with TVS Motor Company too raising a red flag over China's curb on export of rare earth magnets, just days after Bajaj Auto expressed production concerns.
China's Rare Earth Magnet Curb – What Does It Mean?
With new Chinese export rules delaying shipments, manufacturers are warning of significant disruptions to vehicle production if supplies aren't restored soon. At the center of the problem is a crucial component: neodymium-iron-boron (NdFeB) magnets.
These rare earth magnets are indispensable to both electric and conventional vehicles, used in systems ranging from motors and steering to brakes, wipers, and audio equipment. Without them, even a small shortage can bring assembly lines to a crawl.
What Changed?
The bottleneck began in April, when China — which processes more than 90% of the world's rare earth magnets — introduced stricter export controls. Under the new rules, exporters must obtain government licenses and detailed end-use certificates from buyers before shipping.
While pitched as procedural updates, the result has been a slowdown in clearances. According to The Economic Times, several Indian-bound consignments are stuck at Chinese ports with no movement in sight. Unlike some European companies, Indian firms have not yet received export approvals, deepening concerns about when production may start to feel the strain. Current inventory levels, industry executives say, could run out by early June.
India imported 460 tons of rare earth magnets in FY24 — virtually all from China — and planned to import 700 tons this year. Their relatively low value belies their critical function.
No viable alternatives exist at scale today, which leaves Indian production lines exposed. To reduce long-term dependency, India is advancing plans for domestic production. A high-level meeting is reportedly scheduled for June 3, where the Ministry of Heavy Industries will finalize a support framework for magnet manufacturing, including incentives and infrastructure.
What Are The Auto Giants Saying?
'The impact of the ban will begin to reflect in production by June or July," Sudarshan Venu, MD, TVS Motor said during an interaction with CNBC-TV18 on June 2, warning that the electric two-wheeler segment could be especially exposed.
Rare earth magnets, largely sourced from China, are vital to EV motors' performance, and any supply disruption could derail production schedules. In the near to medium term, this could lead to output halts and even potential price hikes, said Venu, as companies race to secure alternative sources.
'We're actively exploring ways to de-risk the situation, but there could be cost increases down the line," the managing director of TVS Motor said.
The company has again underscored the urgent need for India to localise its EV supply chain. 'The auto industry must build a robust domestic ecosystem for such critical materials. Developing a self-reliant supply chain is a necessity," Venu said.
According to the protocol, Indian importers – in this case, TVS Motor vendors – must self-declare the end use of the magnets, which are then cleared through a multi-step certification process involving Indian authorities and the Chinese Embassy.
So far, about 30 such applications have cleared the Indian stages and await final clearance from China. With China supplying nearly 90% of the world's rare earth magnets, sourcing immediate alternatives is proving to be a significant challenge.
Substitutes would require extensive investment in testing, validation, and integration — a process that would only bear fruit in the medium term.
Last week, Bajaj Auto warned of the looming crisis during its Q4FY25 earnings call, describing it as a 'dark cloud on the horizon" and cautioning about production risks as early as next month if the issue isn't resolved. Although a formal process is now in place to certify that these materials won't be diverted for military use, the fate of shipments from China remains uncertain.
Location :
New Delhi, India, India
First Published:
June 02, 2025, 13:12 IST
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