India’s electric vehicle dreams nearly ground to a halt in 2025 — not from battery shortages, charging infrastructure gaps, or even consumer hesitancy, but from something far smaller and more insidious: a few hundred tonnes of rare earth magnets. When China tightened export controls on neodymium-iron-boron materials that year, Indian automakers scrambled to revise production plans, exposing a strategic vulnerability that threatens billions of dollars in EV investments. Permanent-magnet motors using NdFeB magnets power most high-efficiency electric drivetrains globally, yet the entire value chain from ore extraction to finished magnets remains overwhelmingly concentrated in China. India imports the bulk of its rare earth oxides and finished magnets, leaving domestic manufacturers exposed to price volatility, licensing changes, and geopolitical leverage. As India’s automotive sector alone requires approximately 870 tonnes of rare earth magnets in 2025–26 — with demand surging alongside EV penetration — the country confronts an uncomfortable reality: exchanging oil dependency for equally fragile reliance on Chinese rare earth supply chains risks replacing one strategic weakness with another.
China’s Stranglehold on the Magnet Supply Chain
China controls the decisive portion of rare earth processing and downstream NdFeB magnet production, even where mining occurs in geographically diverse locations. This dominance transforms rare earths from commodity materials into strategic inputs, with risk premiums and planning complexity now built directly into sourcing decisions by Indian original equipment manufacturers. The 2025 mini-crisis served as a wake-up call: disrupted magnet shipments demonstrated how a relatively modest material quantity can bottleneck vehicle production worth billions of rupees. Analysts and industry leaders now recognize that permanent magnets represent a choke point as critical as semiconductor chips or battery cells — yet far less visible in public policy discussions until supply disruptions force the issue.
India possesses significant monazite-hosted rare earth reserves — often co-occurring with thorium — and ranks among the top countries by in-situ resources. However, the nation has historically exported raw materials whilst importing separated oxides and high-performance magnets, capturing minimal value from its own geological endowment. This paradox reflects a fundamental truth: processing, not mining, constitutes the genuine bottleneck. Separation, metallization, alloying, powder metallurgy, and precision magnetization require substantial capital investment, proprietary technology, and environmental safeguards that take 10–15 years to scale when built from scratch.
Building Domestic Capacity Through the REPM Mission
Recent policy interventions aim to fundamentally flip this equation. The Union Cabinet approved a ₹7,280-crore rare earth permanent magnet scheme spanning seven years to construct an integrated ecosystem from separated oxides through finished magnets, targeting approximately 6,000 tonnes per annum of domestic capacity. Officials designed the scheme to cut magnet imports for electric vehicles, electronics, defense, and aerospace applications, eventually generating surplus capacity for export markets. New Delhi has instructed Indian Rare Earths Limited to conserve domestic feedstock and pause certain exports whilst incentives and joint ventures for processing and magnet manufacturing facilities are structured.
Partnerships with Japan and South Korea are being pursued to bring magnet manufacturing expertise into India and anchor global customers who might diversify away from exclusive Chinese sourcing. As one minister articulated, the REPM mission intends to “shift India from a raw-material exporter to a significant player in global permanent-magnet supply chains,” with electric vehicles serving as the primary demand anchor. Large component manufacturers such as Sona Comstar, historically India’s largest rare earth magnet importer for automotive applications, are investing in domestic magnet production lines to reduce China dependence and support high-performance interior permanent-magnet motors.
The Pragmatic Dual-Track Strategy
Recognizing that no single approach can fully mitigate supply risk in the short term, India’s EV motor strategy is evolving along parallel tracks: securing magnets where genuinely necessary and designing them out where possible. Some manufacturers have begun redesigning motors to utilize “light rare earth” compositions and more conservative magnet loading to stabilize production under constrained supply, accepting modest efficiency penalties for supply resilience. Simultaneously, Indian startups like Chara Technologies are scaling synchronous reluctance, ferrite-assisted reluctance, and induction motor platforms that avoid NdFeB magnets entirely, relying on ferrites or innovative rotor designs instead.
Two- and three-wheeler manufacturers, including Greaves Electric Mobility, are piloting rare earth-free or reduced-magnet motors in mass-market segments where ultra-high power density proves less critical than cost and robustness. Industry voices stress these alternatives require the same policy support that electric vehicles themselves received a decade ago. As Chara co-founder Bhaktha Keshavachar observes, “just as early EV adoption needed incentives, rare earth-free technologies also needed initial policy support to reach scale.”
Beyond technology choices and domestic manufacturing, India’s strategy is broadening into comprehensive risk management encompassing supply diversification through long-term offtake agreements in friendly jurisdictions, structured engagement with China for near-term relief, and alignment with allied “friend-shoring” initiatives. Recycling is being framed as “urban mining” — recovering neodymium, dysprosium, and other critical materials from end-of-life motors and electronics already within India’s borders, reducing fresh import requirements whilst creating more predictable domestic material streams.
India’s EV motor supply-chain strategy is shifting from narrow cost optimization toward layered resilience: building magnets domestically where economically viable, designing around them where not, diversifying external supply sources, and mining yesterday’s products for tomorrow’s materials. As one industry commentary plainly warned, India cannot afford replacing oil dependency with an equally fragile reliance on a handful of rare earth suppliers.