Indian automakers are facing supply chain disruptions due to continued curbs on rare earth magnet exports from China. 

• The shortage has forced carmakers to import entire components from China and Vietnam, raising costs and threatening eligibility under the Production Linked Incentive (PLI) scheme.

About Rare Earth Magnet

• Definition: Permanent magnets made from alloys of rare earth elements (mainly lanthanides).
• Properties: Very high magnetic strength, high energy density, compact size, superior to ferrite/alnico.
• Limitations: Brittle, corrosion-prone and  usually nickel-plated or coated.

Types of Rare Earth Magnet

• Neodymium-Iron-Boron (Nd-Fe-B)
  • Strongest permanent magnet.
  • Composition: Neodymium, Iron, Boron.
  • Limitations: Sensitive to heat and corrosion.
• Samarium-Cobalt (Sm-Co)
  • Slightly weaker than Nd-Fe-B but more stable.
  • Composition: Samarium, Cobalt.
  • Advantages: High resistance to heat (up to ~350°C) and corrosion.
  • Limitation: More expensive.

Applications of Rare Earth Magnet

• Medical: MRI, X-rays, PET imaging, hearing aids.
• Electronics: Smartphones, laptops, hard disk drives, speakers, headphones.
• Automotive: Electric and hybrid vehicle motors, sensors, power steering systems.
• Defense & Aviation: Precision-guided weapons, aircraft systems, radar.
• Industrial: Wind turbines, robotics, magnetic separation, power generation.

Distribution of Rare Earth Metals

• China: Dominant in mining and processing (≈90%).
• Other Producers: USA, Australia, Myanmar, Vietnam.
• India: Reserves in Andhra Pradesh, Tamil Nadu, Rajasthan, Arunachal Pradesh.

Impact on PLI Scheme

• Local Value Addition Requirement: The PLI scheme mandates 50% domestic value addition to qualify for incentives.
• Risk of Ineligibility: Imports of complete components reduce local value addition, threatening benefits for automakers already enrolled under the scheme

India’s Limitations

• Despite holding the 5th-largest rare earth reserves, India has no significant domestic processing capacity.
• Nearly all REMs used in India are import-dependent, raising concerns for energy security and strategic autonomy.
• Establishing a REE magnet supply chain (mining, processing, separation, and manufacturing) requires 3–4 years. Rare earth projects demand large investments, advanced technology, and long gestation periods.

Government Interventions

• Critical Minerals Mission: The government launched a ₹16,300 crore mission to conduct 1,200+ explorations for critical minerals across India.
• Recycling Scheme: The Union Cabinet approved a ₹1,500 crore scheme to promote recycling of battery waste and e-waste for extracting key minerals.

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