Chinese Freeze On Rare Earth Magnet Talks Pushes Indian Automakers Towards Costlier Alternatives: Report

Indian automakers are facing escalating supply chain pressures as Chinese authorities continue to deny meetings to discuss the rare earth magnet crisis, reported BusinessLine.

Despite receiving Chinese visas in June, an Indian industry delegation has been unable to initiate official talks due to the absence of formal appointments from the Chinese government.

The impasse is pushing original equipment manufacturers (OEMs) to implement costlier alternatives, such as importing fully assembled components instead of smaller parts containing rare earth elements.

These workarounds carry significant financial burdens, with higher import duties, logistics, and air freight expenses, leading to anticipated price increases for vehicles and other consumer products.

“The status remains the same and nothing happened after receiving the visas,” an industry source was quoted as saying by BusinessLine.

The ripple effects are also being felt across the supply chain, especially among tier-II and tier-III suppliers who had depended on direct imports from China.

With many OEMs holding inventory only until the end of July, urgency around alternative sourcing has intensified.

Industry analysts cited in the Businessline report attribute the deadlock to geopolitical tensions.

China currently controls over 90 per cent of global rare earth magnet processing, making the Indian automobile sector, especially EV manufacturers, highly vulnerable to curbs imposed by Beijing.

In response, Indian OEMs are advocating for the creation of a domestic rare earth magnet ecosystem, including local assembly, recycling, and basic processing, to reduce long-term dependency on Chinese supplies.