How rare earth shortages are stalling India’s burgeoning EV sector

In July, India’s best-selling electrical scooter, Bajaj Auto’s Chetak, deed a large velocity bump. A shortage of rare-earth metals had deed accumulation plans, and the institution was forced to astir halve its output.

Bajaj manufactured conscionable 10,824 units of the Chetak successful July, arsenic compared with 20,384 units during the aforesaid play past year, owed to uncommon world shortages.

“The rare-earth magnet proviso concern has been a constraint that created the hazard of a sharper accumulation dip successful July,” Rakesh Sharma, enforcement manager of Bajaj Auto, told Al Jazeera.

The institution has since rapidly redesigned definite motors to usage airy rare-earth magnets and has been reworking proviso chains truthful it tin cater to its needs, Sharma said.

“These changes helped america retrieve adjacent to fractional of our planned July output for electrical two-wheelers. We expect to scope astir 60 percent [of output] during August and September.”

The shortage that Bajaj is facing is industry-wide aft China introduced restrictions connected its uncommon world exports connected April 4, 2 days aft United States President Donald Trump announced reciprocal tariffs connected April 2. No shipment has travel to India since then, putting automobile and different industries reliant connected these metals successful jeopardy.

Vigneshwar Chittur Selvakumar, president of the Federation of Automobile Dealers Association (FADA) that counts astir 15,000 automobile retailers crossed the state arsenic its members, says helium is “deeply concerned” astir however the shortages of these metals “might person a drastic interaction connected the automobile sector”.

“We power astir 80 percent income of the vehicles, and immoderate dip successful accumulation volition impact our concern badly,” Vigneshwar said.

Rare-earth metals notation to a operation of 17 metallic elements, including dysprosium, terbium, europium, samarium, and gadolinium, that are recovered successful abundance successful China, which has the world’s largest reserves of rare-earth elements, estimated astatine 44 cardinal tonnes, and dominates 90 percent of rare-earth elements processing capacity.

Apart from EVs, the metals are besides utilized successful smartphones, machine screens, and different physics devices. They are besides indispensable for defence instrumentality similar radar and guidance systems, arsenic good arsenic aesculapian machines specified arsenic Magnetic Resonance Imaging systems.

“The rare-earth elements assistance successful making beardown magnets that are utilized wide successful electrical vehicles … to support a unchangeable magnetic field,” Aman Bir Singh, an EV consultant, told Al Jazeera. “Internal combustion motor (ICE) oregon hybrid vehicles that tally connected petrol, diesel and upwind turbines besides usage them, but successful a precise tiny quantity, and the existent shortage doesn’t interaction them arsenic much.”

The shortage comes conscionable arsenic India’s EV assemblage was taking disconnected with income crossing 2 cardinal for the archetypal clip successful 2024. This was up 24 percent from 1.6 cardinal conveyance income successful 2023. Two-wheelers pb that with income of 1.2 cardinal units past year.

Sales of electrical cars, too, are connected the rise, and much than 100,000 electrical cars were sold successful the fiscal twelvemonth ending March 31, 2025. Tesla, too, has joined successful and launched its Model Y successful the state successful July. As a result, the electrical car penetration has much than doubled from 1 percent to 2.6 percent during this period, and is expected to transverse 7 percent by 2028, according to a July study by CareEdge Analytics & Advisory.

Sales of electrical cars person started picking up successful India, but businesses are acrophobic the existent uncommon world shortages mightiness thrust imaginable customers distant [File: Rafiq Maqbool/AP]

Several EV companies, however, person refrained from speaking connected the uncommon world crisis.

“The manufacture is inactive successful a fledgling authorities and companies fearfulness that they mightiness suffer customers and besides their stock worth if they concede to uncommon world shortage arsenic the imaginable buyers mightiness beryllium excessively apprehensive to acquisition the vehicles,” said Nilanjan Banik, an economics prof astatine Mahindra University.

The shortage has besides affected the tv industry, wherever rare-earth magnets are captious successful tv manufacturing, peculiarly for speakers, owed to their superior show and compact size.

“As the state remains heavy reliant connected imports for these components, this presents a wide challenge,” said Arjun Bajaj, manager of Videotex – tv manufacturers for assorted reputed brands. “We presently person capable stocks for the existent season, but our absorption is besides to find an alternate solution, and the manufacture is actively exploring alternatives similar ferrite magnets, though matching the show of rare-earth magnets volition necessitate continued probe and technological upgrades,” helium added.

Relief for India

On August 19, China announced it would ease export restrictions connected fertilisers, uncommon earths, and tunnel-boring machines to India aft talks with Indian overseas curate S Jaishankar successful Beijing.

Experts, however, called this a “tactical gesture”.

India’s commercialized shortage with China deed a grounds $100bn successful the past fiscal year. Beijing has besides openly backed India’s archenemy Pakistan successful a caller clash betwixt New Delhi and Islamabad successful May, a reminder that India’s dependence connected China tin beryllium risky for it.

“India’s dependence connected China gives [the latter] important leverage during crises,” pointed retired Ajay Srivastava, the laminitis of Global Research Trade Initiative (GTRI), a commercialized probe group.

“China present supplies implicit 70 percent of India’s needs successful respective captious areas. Everyday products similar laptops (80.5 percent) and level sheet displays (86 percent) are besides dominated by Chinese imports. At the aforesaid time, India’s stock successful bilateral commercialized has collapsed to conscionable 11.2 percent from 42.3 percent 2 decades ago, exposing the fragility of proviso chains. The easing of uncommon world proviso is conscionable a tactical motion and thing beyond,” Srivastava said.

India holds the fifth-largest rare-earth elements with 8.52 cardinal tonnes, but contributes little than 1 percent of the planetary rare-earth mining arsenic it faces stiff challenges with constricted infrastructure, technological issues and regulatory hurdles and biology concerns.

Vishwas Dass, a Delhi-based argumentation expert, told Al Jazeera that the existent disruption indispensable beryllium utilized to accelerate home exploration and connection incentives for refining capabilities, and forging mineral alliances with trusted nations.

The Geological Survey of India (GSI) has already started exploration successful the states of Assam and West Bengal.

“The exploration is portion of India’s semipermanent strategical imaginativeness to execute self-reliance successful cardinal sectors and aligns with the government’s argumentation of securing home mineral supplies for further technological and concern needs,” Asit Saha, manager wide of GSI, told Al Jazeera.

Mahindra University’s Banik, however, says that processing of rare-earth metals volition beryllium a tricky issue. “It mightiness instrumentality implicit a decennary to wholly acceptable up the processing units of uncommon metals, but the exertion of utilizing uncommon world successful vehicles mightiness go outdated by then.”