China Issues Rare-Earth Magnet Export Licences to India

• China has begun issuing export licenses for rare-earth magnets to India, easing supply issues for the auto sector
• New export controls require assurances that materials won't be used for defense purposes
• Indian automakers have adjusted supply chains to manage delays, while the government works to ease restrictions

India has started to get export licenses for rare-earth magnets (REMs) from China, and this has relieved the domestic automobile and auto components industries, which had experienced supply disruptions because of Beijing's export restrictions.

These licenses are being granted to Indian suppliers and foreign component manufacturers with operations in India. Companies like Jay Ushin, the Indian unit of Continental AG, suppliers to Mahindra & Mahindra, Maruti Suzuki, and Honda Scooters and Motorcycles are among the ones who are getting or have already received clearances.

The government official stated, “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”.

China is a major player in the global rare-earth magnets market, which are necessary for the production of EV motors, conventional vehicles, electronic devices, medical equipment, and defense technologies.

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The export controls by Beijing that came into effect on April 4 were part of the trade tensions escalated with the US, following the implementation of higher tariffs on Chinese goods. These limitations have caused the disruption of global supply chains, which in turn, particularly affected the automotive industry in India.

According to the new regulations, Chinese exporters take full responsibility for making sure that rare-earth elements are not channeled into military or dual-use applications. On the other hand, this is a burdensome process involving many documents and checks, so it has been a major cause of delays.

The Indian government was informed about the situation by car makers and parts producers who were particularly hard hit, since rare-earth-based motors are essential in the case of EVs, and hence, they warned that the stoppage of approvals was interrupting EPV manufacturing.

During the last six months, the Indian authorities collaborating with the Chinese government have been trying to fix the problem. In June, the Chinese foreign minister gave a promise to the Indian external affairs minister that the rare-earths export that Beijing is going to take will be light. Automakers have made a move and adjusted their supply chains to prevent further disruptions even though the delays are still there.