KATHMANDU: India’s automotive industry is facing supply pressure due to shortages of rare-earth magnets, largely controlled by China. The issue has affected automakers since the beginning of the current fiscal year, according to ET.
China accounts for about 69 percent of global rare-earth production and nearly 90 percent of processing capacity. This gives it strong control over supply and pricing. The magnets, mainly neodymium-iron-boron (NdFeB), are critical for EV motors, electronics, and infotainment systems.
The shortage has hit electric vehicles the hardest, especially passenger EVs. Commercial EVs follow, while electric two- and three-wheelers face moderate impact. ICE vehicles remain less affected.
To reduce dependence, Indian OEMs are securing alternative global suppliers and developing ferrite-based motor technologies. The Government of India is also pushing for domestic production.
In November 2025, the Union Cabinet approved 72,800 million Indian rupees for a scheme to promote local manufacturing of sintered rare-earth permanent magnets. The plan targets 6,000 MTPA capacity and aims to meet 70-75 percent of India’s demand by 2030.
The initiative is expected to strengthen supply chains for automotive, electronics, and aerospace sectors. Industry players are also investing in local exploration, recycling, and refining.
India’s push for rare-earth self-reliance is now seen as essential for its EV growth and clean energy goals.
