China curbing supply of rare earth magnets is impacting global supply chains. Not just the European Union and the United States, Asian majors like Japan, and India are looking at ways to address this imbroglio.
China accounts for nearly 90% of rare earth mineral processing. As a result the country plays an important role in the overall supply chain.
5 key sectors to watch
From the Indian perspective, here is a look at some of the key sectors that could be impacted if the supply curb continues longer.
Auto sector bearing the immediate brunt
The automotive industry has emerged as one of the worst-hit sectors, with major global and Indian manufacturers reporting disruptions. Rare earth magnets—essential components used in electric motors, power windows, audio systems, and other car parts—are now in short supply.
As per a Reuters report, India’s Bajaj Auto warned that delays in securing magnets from China could “seriously impact” electric vehicle production as early as July. Meanwhile, Bosch confirmed that its suppliers are struggling with export permit approvals from China, and BMW acknowledged that part of its supplier network has been affected, although its own operations remain normal.
According to a report by ET Now, Indian firms are being forced to import entire motor assemblies from China just to bypass the red tape—substantially increasing costs and potentially delaying India’s electric vehicle goals.
Electronics and semiconductor industries brace for impact
Rare earth elements like neodymium and dysprosium are vital in the production of smartphones, laptops, and high-performance semiconductor chips. As supply tightens, industry analysts expect cost pressures and possible production delays across the global electronics and chip manufacturing sectors.
Telecommunications may also face disruption
Telecommunications, battery technologies, industrial machinery and equipment, including precision instruments and robotics, may also face some impact as export restrictions hamper supply chains for these technologies.
According to CNBC-TV18, no Indian company has received import clearance for rare earth magnets from China since April 4. This follows the implementation of a new Chinese export rule that mandates government-issued permits for all rare earth magnet shipments. The regulation has left Indian manufacturers in limbo, even blocking low-end magnets due to bureaucratic confusion.
Renewable energy sector may be impacted supply disruption
Wind turbines and other clean energy technologies also rely heavily on rare earth components. Any prolonged disruption could threaten progress on global renewable energy targets.
According to the International Energy Agency and U.S. Geological Survey, China produces 60 per cent of the world’s rare earth metals and controls 90 per cent of global refining capacity—giving it the upper hand.
Defence and aerospace sectors in focus
The aerospace sector relies on rare earth elements for advanced components used in aircraft, missile guidance systems, and other defense technologies. China’s control over these materials gives it strategic leverage, as these elements are crucial for national security applications.
Experts believe that China’s move to impose new export rules on rare earth magnets is a response to escalating global trade tensions, including tariffs imposed by US President Donald Trump. While India may not be the primary target, it remains one of the worst affected due to its heavy reliance on Chinese supplies.
According to a CNBC-TV18 report, senior Indian ministers are considering sending an industry delegation to Beijing to engage with China’s Ministry of Commerce. The goal is to seek clarity on the new permit system and resolve the disruption in rare earth imports.