Rare Earth Supply Crunch: Indian Firms In Limbo As China Delays Export Licences, Says Report

In just two weeks, the number of companies awaiting licences from China’s Ministry of Commerce has reportedly surged from 11 to 21. The list includes names like Bosch India, TVS Motor, the report said

The bottleneck follows a directive issued by China on April 4, which requires exporters to obtain official licences for shipping medium and heavy rare earth magnets.

Source : ANI

A growing number of Indian firms are now waiting for crucial export approvals from China to access rare earth magnets, a vital component in electric vehicle manufacturing and other industrial uses.

In just two weeks, the number of companies awaiting licences from China’s Ministry of Commerce has surged from 11 to 21, reported The Economic Times citing individuals tracking the developments. Among those on the list are well-known industry names such as Bosch India, TVS Motor, Uno Minda, Marelli Powertrain India, and Mahle Electric Drives India.

Sona Comstar, whose earlier application was declined due to procedural oversights, has reportedly reapplied and is also part of the group now awaiting clearance.

“These companies have duly filled in and got endorsed the end-user certificate and shipped the requisite documents to their suppliers for procuring rare earth magnets from China, but licences are yet to be awarded by the government there,” the news organisation reported, citing a senior executive familiar with the matter.

Policy Shift and Geopolitical Overhang

The bottleneck follows a directive issued by China on April 4, which requires exporters to obtain official licences for shipping medium and heavy rare earth magnets. As part of the new procedure, buyers must submit an end-user certificate that affirms the materials will not be used in any activities linked to weapons of mass destruction or their delivery mechanisms.

Though this regulation emerged partly as a counter to  US President Donald Trump’s tariffs, Washington has since reached a new bilateral agreement with Beijing that will ensure the continued supply of rare earth magnets to the United States.

Meanwhile, Indian officials are attempting to initiate talks through diplomatic outreach, but progress has been limited so far, the report said.

Local Operations Hit by Global Licensing Delays

While some European manufacturers have managed to obtain approvals to import rare earth magnets from China, their Indian subsidiaries remain in limbo, awaiting clearance from Beijing. Industry experts point out that the strained diplomatic and economic relations between India and China are exacerbating the delay.

The scale of reliance on these components is evident from figures provided by the Society of Indian Automobile Manufacturers, which shows that 52 Indian entities currently import rare earth magnets from China to supply domestic vehicle manufacturers. In FY25, India brought in 870 tonnes of these magnets, valued at Rs 306 crore.

Despite the modest monetary value of these imports in comparison to the total industry size, their absence could halt production lines. “While the value of imports compared to the industry size is minuscule, vehicles cannot be manufactured even if we are short of one component where a rare earth magnet is being used,” an executive warned.

With stocks expected to run dry by early July, the situation has left manufacturers bracing for possible disruptions, unless China grants the necessary export licences soon.