There has been no breakthrough in the ongoing discussions between India and China over supply of rare earth magnet. Indian auto and electronic manufacturers are facing a massive shortage of rare earth magnets after China imposed export restrictions on materials.
A top government official told TNIE that the talks between Indian and Chinese governments over the ease of exports rule is going on, but there has been no breakthrough. The government has maintained that India is engaging with China both at the diplomatic and commercial levels to find a resolution to the crisis. However, no the talks have not resulted in any positive results, sources said.
The ministry of heavy industries has initially said that an industry delegation would visit China for a meeting with the Chinese commerce ministry. But sources told TNIE that the visit by the delegation was cancelled after the Chinese government did not show any interest in the discussion.
Rare earth magnets are made from alloys of rare earth elements. India sourced over 80% of its approximately 540 tonnes of magnet imports from China last financial year. China is the world's dominant exporter of rare earth magnets, controlling over 70% of global Rare Earth Element (REE) production and over 90% of refining capacity.
In April 2025, Beijing imposed stricter export controls on seven rare earth elements and finished magnets, mandating export licenses. This revised framework demands detailed end-use disclosures and client declarations, including confirmation that products will not be used in defence or re-exported to the US.
The government has maintained that it has been looking for alternative suppliers for the time being. Even automakers are actively de-risking their supply chains by exploring alternative suppliers in countries such as Vietnam, Indonesia, Japan, Australia, and the US, and optimizing existing inventories.
In the meanwhile, the government is in the process of implementing a Rs 1,345-crore incentive scheme for production of these magnets locally.
Big component makers like Uno Minda, Sona Comstar and auto manufacturer Mahindra & Mahindra are said to be lining up for applying under the scheme. “Rare earth magnets are used for manufacturing crucial auto components, and we are hoping all major component makers would apply under the incentive scheme,” said a government official.