Imports of rare-earth permanent magnets from China into India are resuming at a steadier pace after the Directorate General of Foreign Trade (DGFT) began issuing government-backed certificates confirming the magnets will not be diverted to defence use or re-exported to the United States, providing relief to auto and electronics manufacturers who had faced supply disruptions for months.
Roughly 30 consignments have already been cleared under the new certification process, after China insisted that end-use assurances from Indian importers alone were not sufficient and demanded that the Indian government also validate or issue the certificates. India remains heavily dependent on Chinese rare-earth magnets, having imported close to 54,000 tonnes in FY2024-25, of which 93 percent came from China, making the supply chain a critical vulnerability for the automotive and electronics sectors.
How Does the Rare-Earth Magnet Shortage Affect Indian Manufacturers?
Automakers, particularly manufacturers of electric vehicles and components that rely on permanent magnet motors, had faced production slowdowns as Chinese export restrictions tightened earlier in the year, forcing some companies to draw down inventories or delay production schedules. With DGFT certification now smoothing the customs clearance process for import consignments, automotive component makers are expecting incremental relief, though the requirement for government-validated end-use certificates adds a compliance layer that industry bodies say still slows the overall supply chain compared to pre-restriction timelines.
What Is India Doing to Reduce Its Rare-Earth Dependence?
In parallel with resuming imports, the government has approved a ₹73 billion rare-earth permanent magnet manufacturing programme aimed at building domestic production capacity. The Ministry of Heavy Industries opened technical bids on August 13, 2026 for five beneficiary slots under the scheme, drawing applications from major companies including Larsen & Toubro and state-owned Coal India, signalling serious industrial interest in reducing reliance on a single overseas supplier for a strategically critical input.
Market and Trade Reaction
Auto component and electric vehicle stocks have shown sensitivity to news on the rare-earth magnet supply situation throughout the year, with the resumption of certified imports seen as a near-term positive for production continuity. Analysts note, however, that the underlying dependency on Chinese supply remains unresolved and that any renewed tightening of export controls by Beijing could quickly reintroduce the same production risks for Indian manufacturers.
What Happens Next?
The Ministry of Heavy Industries is expected to finalise the five beneficiary companies under the rare-earth magnet manufacturing scheme in the coming months, marking a first concrete step toward domestic production capacity. In the near term, DGFT is likely to continue processing certification requests for import consignments, while trade and industry officials monitor whether China maintains, tightens or eases its export control regime on rare-earth materials, given its direct bearing on India’s auto and electronics manufacturing output.
Frequently Asked Questions
Why were rare-earth magnet imports from China disrupted?
China introduced export control measures on rare-earth magnets and demanded government-validated end-use certificates guaranteeing the magnets would not be used for defence purposes or re-exported to the United States, slowing import clearances into India.
How dependent is India on Chinese rare-earth magnets?
India imported close to 54,000 tonnes of rare-earth permanent magnets in FY2024-25, with 93 percent sourced from China, making it heavily reliant on a single supplier for this critical input.
What is India doing to reduce this dependence?
The government has approved a ₹73 billion rare-earth permanent magnet manufacturing programme, with the Ministry of Heavy Industries evaluating technical bids from companies including Larsen & Toubro and Coal India for five beneficiary slots.
Leave a comment