EV Production In India Threatened By Component Supply Disruption, Crisil Sounds Alarm

India's electric vehicle (EV) manufacturing sector is staring at a likely production halt as vital rare earth magnet imports from China faces unprecedented delay, according to a new assessment by Crisil Ratings. The credit rating agency has warned that approximately 30 import applications from Indian manufacturers received government endorsement by May 2025's conclusion, yet Chinese authorities have approved none, resulting in zero shipments reaching Indian shores.

These specialised magnets represent under 5 per cent of total vehicle manufacturing costs but serve as critical components for permanent magnet synchronous motors that power electric vehicles and hybrid systems. 

The materials also support electric power steering mechanisms in traditional internal combustion engine automobiles, making their absence felt across multiple automotive segments.

Global Supply Chain Disruptions 

Beijing implemented fresh export limitations in April 2025 on seven rare earth elements and completed magnets. 

The updated regulations mandate comprehensive end-use documentation and customer verification, including guarantees that materials won't support defence apps or face re-export to the US. These enhanced requirements have generated approval delays exceeding 45 days, creating significant backlogs throughout international supply networks.

India's Heavy Dependence On Chinese Sources

The South Asian nation imported over 80 per cent of its approximately 540-tonne rare earth magnet requirements from China during the previous fiscal year. This concentration creates substantial vulnerability when supply disruptions occur.

"The supply squeeze comes just as the auto sector is preparing for aggressive EV rollouts. Over a dozen new electric models are planned for launch, most built on PMSM platforms," Anuj Sethi, Senior Director, Crisil Ratings, was quoted as saying.

Manufacturing Schedules Face Threats

Crisil's analysis indicates that disruptions lasting beyond one month could derail electric vehicle launches and halt production timelines. Most automotive manufacturers maintain inventory levels spanning just 4-6 weeks, creating narrow buffers against supply interruptions.

Should current conditions persist, electric vehicle model debuts may face postponement or rescheduling beginning in July 2025. While electric vehicles face the most immediate risk, conventional passenger cars and two-wheelers could experience impacts if supply constraints continue.