China has started granting export licenses for rare-earth magnets (REMs) to India, providing relief to India’s automobile and auto parts sector, which had raised concerns over supply shortages after Beijing’s restrictions.
Approvals are being processed through domestic suppliers and Indian subsidiaries of foreign component manufacturers. Firms that have secured or are in the process of securing approvals include Jay Ushin, the Indian arm of German auto parts manufacturer Continental AG, vendors serving Mahindra & Mahindra and Maruti Suzuki, and suppliers to Honda Scooters and Motorcycles.
“Although it’s a slow start, China’s Ministry of Commerce has started processing and clearing the applications. Some companies have received the necessary approvals. The process has now started,” an official told Business Standard.
China controls the majority of the world’s production and processing of rare-earth magnets, which have been under export restrictions since April 4. These magnets are essential for a wide range of industries, including automotive and auto components, electronics, medical equipment, and defense.
Beijing introduced export licensing rules as a countermeasure to higher U.S. tariffs on Chinese goods, but the impact has spread globally.
Under the updated regulations, Chinese exporters can obtain clearance only if Indian importers assure that the materials will not be used for dual-purpose or defense-related activities.
However, industry leaders noted that the extensive paperwork and verification steps make the procedure lengthy and complicated.
Indian automakers and parts manufacturers had previously cautioned the government that delays in approvals from China’s Ministry of Commerce were disrupting production, particularly for EVs. Over the past six months, the Indian government has engaged with Beijing to address these delays in processing critical raw material shipments.
In June, during Chinese Foreign Minister Wang Yi’s visit to New Delhi, he assured India’s External Affairs Minister S. Jaishankar that Beijing would ease export restrictions on rare-earth minerals and other items.
Government officials affirmed that, despite the disruptions and slow processing, the industry has managed to adapt and continue production.
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