Indian EV Industry Faces Rare Earth Magnet Shortage Threatening Production by July: Bajaj Auto Warns
The Indian electric vehicle (EV) industry is facing a critical supply chain crisis that could significantly hinder production as early as July 2025, due to a looming shortage of rare earth magnets. Bajaj Auto’s Executive Director Rakesh Sharma has issued a strong warning about the severe bottlenecks in obtaining these essential components, which are vital for manufacturing electric motors used in EVs. Rare earth magnets play a pivotal role in the functionality and performance of electric vehicles, making their uninterrupted supply crucial for the sector’s growth and sustainability.
During a recent media briefing, Sharma highlighted the growing concern surrounding the availability of rare earth magnets, stating that the current approval process for importing these materials has become highly restrictive and convoluted. The process now involves a multi-layered clearance system requiring an end-use declaration to confirm that the magnets will not be used for military applications. This declaration must be approved by several Indian ministries, the Chinese embassy in India, and finally, by Chinese authorities who issue the export clearances. Despite more than 30 applications being filed by companies in the Indian automotive sector, none have been approved so far. Chinese authorities have indicated that the clearance process could take 40 to 45 days, but there has yet to be any resolution or delivery, intensifying the anxiety within the industry.
Sharma noted that the supply of rare earth magnets is rapidly dwindling. If this situation is not addressed immediately, EV production lines across India, including at Bajaj Auto, could face severe disruptions by July. The crisis is not limited to Bajaj Auto alone but is a widespread issue affecting the entire Indian automotive ecosystem. India’s dependence on China for rare earth magnets is nearly absolute, as China processes over 90% of these magnets globally. While rare earth deposits do exist in India and other parts of the world, mining and refining these elements require specialized infrastructure, high levels of investment, and years of technical learning—challenges that cannot be overcome in the short term.
Alternate strategies, such as replacing rare earth magnets with other materials or technologies, also present significant hurdles. Sharma emphasized that such replacements must be developed and tested for performance and durability—an effort that involves long R&D cycles and cannot provide a quick fix. The development of self-reliant or diversified supply chains is a long-term goal that necessitates strategic investments, policy support, and industry collaboration. At present, the cost implications and technological feasibility of such alternatives remain uncertain.
Financially, the shortage poses a direct threat to the momentum of India’s EV revolution. The rare earth magnet bottleneck could delay product launches, increase production costs, and impact the affordability and availability of electric vehicles in the Indian market. Industry bodies like the Society of Indian Automobile Manufacturers (SIAM) and the Automotive Component Manufacturers Association of India (ACMA) have already urged the Indian government to expedite the import approval process and engage with the Chinese government to facilitate the release of shipments.
This crisis was triggered by China’s recent policy changes in April, requiring strict import permits for rare earth magnet exports. While the move was initially interpreted as a countermeasure to U.S. tariffs, its consequences are now being felt across global EV supply chains, particularly in India, where the dependency on Chinese rare earth materials is overwhelming.
Despite the pressing challenges, Bajaj Auto remains hopeful. Sharma expressed optimism that either the bureaucratic process will start to yield results or that the industry will find some relief through the development of alternate supply chains and technological innovations over the course of the year. However, he cautioned that there is no easy or immediate solution, and overcoming this crisis will require sustained effort and strategic vision.
For more insights and updates on this issue, and to watch video news on the topic, visit our YouTube channel THE OLIGO.
