New Delhi Aids India Auto's China Outreach Amid Rare-Earth Export Ban

India’s auto industry is getting all the help it needs to tide over China’s curbs on exports of rare earth magnets, so much so that even 7, Lok Kalyan Marg, has now stepped in.

The Prime Minister’s Office and the Indian Embassy in China are trying to set up a meeting between representatives of India’s auto sector and the Ministry of Commerce, People’s Republic of China, in Beijing, people familiar with the talks told NDTV Profit.

At least three central government ministries—heavy industries, external affairs, and industry & commerce—are involved in the discussions, these people said.

A fifty-member delegation of representatives from Indian automakers and industry bodies SIAM and ACMA had planned to visit China this week, but that didn’t work out.

“It is important that the world recognises the dangers of concentration of processing and supply of critical minerals in select geographies,” India’s Commerce Minister Piyush Goyal said during a press conference with Italy’s Deputy Prime Minister Antonio Tajani in Brescia Italy on Thursday, without explicitly naming China. Such concentration can pose serious risk to global economic development, he said.

Indian automakers have exactly one month to secure fresh supply of rare earth magnets from China, a lack of which can bring vehicle production in the world’s third largest automotive market to a grinding halt.

China’s ban on export of rare earth magnets—a response to US President Donald Trump’s tariff war—meant that India’s auto parts makers and original equipment manufacturers had 90 days of supplies. The ban also meant that an Indian supplier now has to apply for a fresh licence to access the rare earths. The application process can take as such as 60 days, with no guarantee of licence.

Thirty such applications have been submitted so far. None have been approved.

To be sure, India is already looking to de-risk itself from the rare earths supply chain, 90% of which is concentrated in China.

The heavy industries ministry is working on a policy to promote domestic processing of rare earth materials, one of the people cited above said. It would be similar to production-linked incentive schemes that are already in effect for sectors such as textiles to pharmaceuticals. A PLI scheme helps achieve cost parity with imports and boost local demand.

According to Reuters, the outlay of such a PLI scheme for rare earths is yet to be decided. The government is likely to meet industry officials next week to finalise the details.

But even if the government fast-tracks the process, building a supply chain for rare earths in India would take years, the person cited earlier said. The dependence on China is a given until the end of this decade.

India has the world’s third largest reserves of rare earths at 6.9 million tonnes, according to the US Geological Survey, but local processing and refining operations is next to negligible. Only one public-sector undertaking, IREL (India) Ltd., is involved in the production of three rare earths but none of them find application in the local automobile sector.

In April 2025, the government launched the National Critical Mineral Mission “to establish a robust framework for self-reliance in the sector”.