Indian firms granted first Chinese rare earth magnet licences, government confirms

The Indian government has granted the first set of import licenses to four domestic companies, including the Indian arms of suppliers like Hitachi and Continental India, allowing them to procure crucial rare earth (RE) magnets directly from China.

The move comes as a welcome relief to the Indian auto industry, which has been severely strained since Beijing imposed strict export controls on these critical materials in April.

Thawing a critical supply freeze

The licences represent a breakthrough, marking the first government clearances since China—the world’s dominant producer—tightened the export process for RE magnets.

These magnets, particularly neodymium-iron-boron (NdFeB), are indispensable components for manufacturing electric vehicle (EV) motors, wind turbines, and other high-tech equipment.

The new Chinese restrictions, which did not impose an outright ban but made procurement extremely cumbersome, had raised serious concerns across India's nascent EV sector about potential shortages, production delays, and subsequent price hikes.

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The Indian car industry had lobbied the government to simplify the process.

Industry sources indicate the permits are conditional and subject to strict checks, including an assurance to Chinese authorities that the imported magnets will be used exclusively in vehicles and not for defense or military applications. Importers were also required to secure endorsements from local bodies like the Director General of Foreign Trade (DGFT).

The Ministry of External Affairs (MEA) confirmed the development, noting the importance of securing this essential material for domestic industries.

The MEA spokesperson stated on Thursday: “Yes, we confirm that some Indian companies have received licences to import rare earths from China.”

A win against costly redesign

The ability to import magnets directly is a major advantage for Indian manufacturers.

Previously, Beijing had reportedly begun insisting that carmakers buy complete electric motor assemblies instead of just the magnets. This would have forced Indian auto companies to undertake costly vehicle redesigns to fit the standard sizes of Chinese motor assemblies.

Getting licences for the magnets lets manufacturers adjust motor sizes to fit their vehicles. While India aims to build a strong domestic rare earth supply chain in the long term, these licences give short-term stability to the country’s high-tech manufacturing.