China Lifts Ban On Rare Earth Magnet Exports To India, Indian EV Industry Breathes A Sigh Of Relief

After weeks of negotiations, Beijing has finally resolved to lift the ban on rare earth magnet exports to India, reported The Economic Times. This significant breakthrough was achieved during the Chinese foreign minister, Wang Yi's two-day visit last month. The resolution comes at a crucial time, especially for the automotive industry, as it braces for the festive season ahead, during which sales of cars and bikes usually spike. 

What Was The Industry’s Situation?

The rare earth magnet export ban had almost cripled Indian automotive companies, wherein some even had cut down on production. Bajaj Auto was one such notable OEM cutting short the production of its all-electric scooter, the Chetak which registered a massive year-on-year drop of 47% in its sales in July 2025. The severe shortage of heavy rare-earth magnets took a toll on its production capacity as a result dealer dispatch was cut by 50% as well. Bajaj Auto was also slated to launch a new affordable Chetak, which was put on the back burner due to the same reason. Even TVS Motor Company had issued a warning stating how the export ban was taking a toll on its production. Due to which, sales of its electric scooters were seeing a year-on-year dip as well. 

Why Was There A Ban On Rare Earth Export?

China’s decision to ban rare earth exports to India was driven by security reasons due to the growing security tensions between the two countries. Plus, US President Donald Trump’s decision to impose tariffs on China also played a huge factor in the latter exerting its soft power. 

However, those political differences were laid to rest following the successful troops disengagement process on the Line of Actual Control. Both sides have agreed to gradually restore normalcy, and easing economic restrictions is part of that initiative. 

Moving Forward

When China imposed a ban on rare earth magnet exports, several Indian firms came up with plans to set up local processing and manufacturing facilities. Coupled with the fact that, despite India ranking 5th globally in rare earth reserves, it still didn’t have the technology to process these minerals. The Central Government had also come up with a $5,000 crore incentive scheme to boost domestic rare earth magnet production — but there hasn’t been much development on that front. 

While the ease of rare earth magnet export from China will certainly help boost the EV production in the country, which has been seeing an uptick in sales otherwise. It should also be taken with a pinch of salt, for the ban was a stark reminder of how fragile India’s EV industry is, especially as the raw materials powering this sector are anchored to a single supplier.