India's Search for Alternative Rare Earth Magnets Supply

India is actively seeking alternative sources for importing rare earth magnets due to current supply disruptions from China. The ongoing trade tensions, marked by US-imposed tariffs on China, have led Beijing to restrict exports of certain rare earth elements essential for defense, energy, and automotive industries.

Current Situation

• China has imposed export restrictions on seven rare earth elements and magnets, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.
• These restrictions require Chinese exporters to obtain defense licenses.

India's Response

• India is in discussions with China to resolve the issue but is also exploring alternative sources globally.
• Potential alternative countries include Vietnam, Malaysia, Australia, Japan, and South Korea.
• Establishing a new supply chain will be time-consuming as many of these countries have limited production capabilities.

Industry Impact and Strategy

• India's auto industry views China's restrictions as a catalyst to diversify supply chains.
• Key areas to consider include rare earth reserves, extraction, and processing capabilities.
• China dominates the market with 50% of global reserves, 70% of extraction, and over 90% of processing capacity.
• India, despite having 7-8% of global reserves, lacks significant processing capacity.

Potential Solutions

• Short-term solutions include using light rare earth elements (LREEs) domestically, which may necessitate design changes in vehicle motors.
• OEMs may import sub-assemblies from China to stabilize production temporarily.
• Long-term solutions focus on developing domestic rare earth projects and processing facilities to achieve self-sufficiency.

Conclusion

While temporary measures are being explored, the ultimate solution for India lies in strengthening its domestic capabilities in rare earth extraction and processing to reduce dependency on China.