INDIA'S RARE EARTH MAGNET CRISIS AMID SUPPLY DISRUPTION

India faces a rare earth magnet crisis as China's export restrictions disrupt supplies essential for electric vehicles, renewable energy, and electronics.

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Heavy Reliance on China

India's predicament is intensified by its overwhelming reliance on China, which currently dominates around 70 percent of the world's rare earth mining and over 80 percent of rare earth processing capacity, thereby controlling much of the supply chain from raw ore extraction to the final magnet products; this dependence is particularly problematic in the context of escalating geopolitical tensions, as China has recently imposed export restrictions on rare earth elements and magnets, actions perceived as strategic moves to exert leverage amid global disputes, which have consequently led to supply shortages, price hikes, and increased competition for these critical inputs—factors that jeopardize India's industrial ambitions and highlight the vulnerability of relying on a single dominant supplier for such a crucial resource.

Impact on the Industry

The automotive sector, which is rapidly pivoting towards electric vehicles as part of India's commitment to reduce pollution and dependence on imported fossil fuels, is among the hardest hit by the rare earth magnet shortage, since these magnets are essential for building efficient and reliable electric motors; the inability to procure sufficient quantities threatens to disrupt production schedules, delay the rollout of affordable EV models, and undermine the government's "Make in India" campaign, which aims to develop a robust domestic manufacturing ecosystem capable of meeting both national and global demand; at the same time, the renewable energy sector, particularly wind power generation, relies on rare earth magnets for high-performance turbine generators, and the scarcity of these materials risks slowing the addition of new clean energy capacity, complicating India's ambitious target of installing 500 gigawatts of renewable energy by 2030 and thus impeding its climate change commitments.