India’s automobile sector is on alert as supplies of rare earth magnets from China remain suspended, two weeks after Beijing promised to ease export restrictions. Despite high-level talks between the two countries, automakers and component suppliers say little has changed on the ground, and concerns are mounting that production could be disrupted during the upcoming festive season, when demand typically spikes.
Why Beijing tightened the screws?
The trouble dates back to April 2025, when China’s Ministry of Commerce issued Announcement No. 18. The directive imposed new licensing rules and export controls on seven key rare earth elements, including dysprosium, terbium, and samarium. These materials are indispensable for electric vehicle motors, wind turbines, defence hardware, aerospace technologies, and high-performance electronics.
Beijing argued the measures were necessary to protect national security and comply with non-proliferation rules for dual-use materials. Yet trade analysts say the timing was no coincidence — it came soon after Washington raised tariffs on Chinese goods.
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