India Has EV, Net Zero Ambitions, Needs A Workaround For China

The government knows the risks. “We will definitely have to look for alternative sources of rare earth minerals, and India is exploring those sources besides China,” Gopal Krishna Agarwal, national spokesperson for economic affairs, Bharatiya Janata Party (BJP), told The Secretariat. 

The alloys of rare earth elements (REE) make powerful magnets that are integral to green technologies. EV manufacturers are increasingly threatened by the ongoing rare earth magnet crisis, in turn hurting the country’s clean mobility targets. 

“The auto industry, specifically the EV industry, is heavily dependent on the rare earth magnets used in EV motors,” Rachna Ahuja, Chairman of Ingar Electronics, an EV components manufacturer, told The Secretariat. With China tightening its export controls on such magnets, she warned of serious delays: “China’s exports of such magnets will lead to production being hampered and delayed, until we find a permanent solution.”

China’s Magnetic Pull

China’s dominance in the global REE sector is the result of decades of strategic policy. Since the 1970s, China invested heavily in mining, smelting, and separation, supported by export quotas and state-owned enterprises. Today, it controls over 85 per cent of global rare earth processing capacity. Any policy change in Beijing reverberates across global markets.

India, on the other hand, is 100 per cent import-reliant for five of these critical minerals: cobalt, lithium, nickel, REEs, and silicon, making our supply chain vulnerable to trade policies, geopolitical relations, and commodity prices. The high import reliance, especially on China, makes India’s Net Zero targets at the behest of global supply chains. 

“India has its own resources, which have to be exploited. More work has to be done and the government is looking into it,” said Agarwal. 

What Agarwal is referring to is a deeper problem. Even though India holds the world’s fifth-largest rare earth reserves — a whopping 7 million tonnes — it mined just 2,900 tonnes in 2023, or less than 0.1 per cent of its known deposits.

This vulnerability has already had ripple effects. Maruti Suzuki, India's largest carmaker, is reportedly cutting back some of its EV production targets — a sign that supply-side shocks are already altering business plans.

The “-iums” at the bottom of the periodic table are not actually rare, but are found in very low concentrations around the world, making them hard to mine. The heat-resistant magnets used in EVs are made from metals like dysprosium and terbium, and refineries in China produce almost 99.9 per cent of the world’s supply. 

The result is that a sector central to India’s clean energy transition is now at the mercy of foreign policy decisions in Beijing.

What Is To Be Done

Even as India eyes future mines and bilateral trade deals, the pressure to deliver on clean mobility targets in the present is mounting. No magnets lead to no production, which leads to EV makers missing targets and losing government subsidies. 

The availability of rare earth magnets isn’t just a supply chain issue — it could slow the country’s clean transition altogether.

There may be workarounds in the long term. Researchers are exploring magnet-free EV designs and rare earth recycling — such as extracting magnets from e-waste or scrapped EVs. Agarwal emphasised that reducing dependence on storage technologies altogether is another long-term solution, both for supply security and environmental reasons.

“The EV industry has to look into the long-term perspective,” he said. “There are short-term challenges, but the EV industry's dependence on storage has to be lessened, otherwise there are environmental concerns also.”

But the current crunch signals the need for urgent structural changes. Until India can bridge the gap between its mineral potential and actual production, supply shocks — whether from China or elsewhere — will remain a persistent threat.

As Ahuja put it, “India’s self-sufficiency in this domain is of utmost importance.”