In early April 2025, China imposed a restrictive export ban on rare earth magnets — a move it described as a measure to protect national security. These magnets are critical for manufacturing electric vehicles (EVs), renewable energy systems, defense equipment, and high-tech electronics. With China controlling around 90% of global magnet processing, the ban has sparked global alarm.
India’s Response
Diversification of Supply Chains
Commerce Minister Piyush Goyal has termed China’s ban a “wake‑up call” and affirmed that India is actively exploring alternative magnet suppliers while continuing to pursue diplomatic engagement with China for short‑term relief.
Fiscal Incentives for Domestic Production
India’s Heavy Industries Ministry is developing a fiscal incentive scheme to promote domestic manufacturing of rare earth magnets, intending to bridge the price gap with Chinese imports.
Machinery Imports and Auto Industry Safeguard
To enable local production, the government is considering tariff exemptions on magnet-processing machinery, coupled with sending automotive industry delegations to China to expedite essential imports.
Urgency and Strategic Consequences
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EV Secor Risk: Analysts warn India’s EV manufacturers may face production halts by late June if magnet supply remains constrained.
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Global Impact: Automakers worldwide are pressing governments and multilateral forums to alleviate China’s export restrictions.
Expanding Mineral Diplomacy
To reduce reliance on China, India is deepening global collaborations:
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Through the National Critical Mineral Mission, India is ramping up domestic mining and partnerships with countries like the US, Japan, and Australia.
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Experts advocate for Quad-level coordination and market development — from mining to magnet fabrication — including possible cooperation with resource-rich nations.
Innovation and Long-term Alternatives
R&D initiatives include exploring rare-earth-free magnet technologies (such as iron-nitrogen-carbon composites), which could reduce dependency on China over time.
| Timeline | Measures in Play |
|---|---|
| Short Term | Diplomatic outreach to China, stockpile critical inventories |
| Medium Term | Launch fiscal packages, import machinery incentives, involve private sector |
| Long Term | Build upstream-to-downstream “mine-to-magnet” value chains, invest in R&D |
These steps aim to protect India’s industrial growth and enhance global supply resilience amid geopolitical uncertainties.