India considers alternatives as Chinese supply of rare earth magnets faces disruption.

The Indian government is actively investigating the ongoing disruption in the supply of rare earth magnets from China, a situation that has affected Indian industries since early April. Sources indicate that senior officials from the Prime Minister’s Office, the Ministry of Heavy Industries, the Ministry of External Affairs, and the Ministry of Commerce are engaged in discussions aimed at supporting impacted sectors and communicating with Chinese authorities.

Since April 4, Indian firms have not received any rare earth magnets due to a new regulation introduced by China. This rule mandates that Chinese exporters obtain an end-use certificate for any shipment, verifying that the products will not be utilized for military or dual-use applications.

Diplomatic efforts are currently in motion. The Indian Embassy in Beijing is facilitating a meeting between an Indian industry delegation and Chinese government representatives, including officials from the Chinese Ministry of Commerce. The goal is to highlight the challenges faced by Indian companies and request a loosening of export restrictions.
In the interim, Indian authorities are considering alternative options. One possibility is to permit companies to import complete assemblies or sub-assemblies instead of individual magnets. However, this may necessitate changes to quality control standards and eligibility criteria under various government initiatives such as the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME), PM-eDrive, and the production-linked incentive (PLI) programme, all of which require domestic value addition.

Other solutions being explored include the import of magnets from third-party countries, provided that suppliers with existing inventory can be located. The cost and availability, however, remain uncertain. Companies with limited stock may need to stagger production to conserve inventory, while those with minimal supplies may face shutdowns by June or July.

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