India’s auto industry is adapting to China’s technology and rare-earth restrictions, even as a thaw in bilateral ties raises hopes of easier access.
Chinese firms’ reluctance to transfer battery technology to Indian companies and Beijing’s continued restrictions on rare earth magnet exports are pushing automakers and component makers to seek alternatives to Chinese technology and supplies.
The contrast is emerging just as India has begun clearing Chinese investments in the auto sector, including one in a Uno Minda joint venture. It also comes ahead of India hosting the BRICS summit on 12 and 13 September, when Chinese President Xi Jinping is expected to visit, according to multiple reports.
“As much as we recognize that China has really taken a front step on this, the Chinese also recognize they're not really eager for any of their companies to go and share their know-how or allow competitors to crop up in other parts of the world,” Vikramadithya Gourineni, executive director, Amara Raja, told Mint.
The company had struck a deal with Chinese firm Gotion to access lithium iron phosphate (LFP) battery technology, but the arrangement stalled. Gourineni said Amara Raja subsequently focused on building its own research centre and hiring global talent.
The experience was echoed by JSW Group on Wednesday, when senior executive Parth Jindal said the conglomerate had put its 50 GWh gigafactory plan on hold.
“LFP is not available anywhere in the world outside of China, and right now they are guarding it like a weapon,” JSW Group executive Parth Jindal said on Wednesday while speaking about the company’s decision to put its 50 GWh gigafactory plant construction on hold.
LFP is one type of battery technology, alongside nickel manganese cobalt (NMC). While LFP is 20-30% cheaper and has more stable chemistry than NMC, NMC offers higher performance in terms of range and is more diversified, with Japan and South Korea also having access to the technology.
That gives Indian companies access to an alternative battery chemistry, but not necessarily an equivalent one.
Rare-earth workarounds
While battery technology remains difficult to access, Indian firms are also struggling to obtain rare earth magnets from China, with restrictions on export licences first imposed in April 2025.
China’s decision to grant licences to four firms out of 36 pending applications in October 2025 had raised hopes that Beijing would gradually ease the restrictions. But at least two industry executives said approvals remain rare.
“Rare earth magnets are still restricted. So heavy rare earth magnets cannot be imported. Almost all that we do today is with light rare earth alternatives, and it's working fine,” Vivek Vikram Singh, group chief executive at Sona Comstar, said in an earnings call on 23 July.
During a press conference on 7 July, Automotive Component Manufacturers Association (Acma) director general Vinnie Mehta also said that rare earth licences are not being granted to Indian firms.
Rare earth magnets are primarily used in electric vehicle motors, electronic parts and sound systems, among other parts, in a vehicle.
The restrictions have prompted companies to adjust their supply chains rather than rely solely on Chinese supplies.
Hero MotoCorp in its annual report for fiscal year 2026 (FY26) said that it had used a combination of light rare earth and bonded magnets, sourced sub-assemblies from China and found alternative supply routes through Vietnam and Europe before moving fully to ferrite magnets.
“Hero MotoCorp has successfully mitigated the risk by moving to light rare earth (non-restricted) and bonded magnets, procuring sub assemblies from China and finding alternate supply routes—including free zone geographic locations like Vietnam & Europe—before fully switching over to ferrite magnet,” Hero said in the report.
China has allowed exports of magnets using light rare earths, but these can offer lower performance than those using heavy rare earths and may require tweaks to compensate. Exports of heavy rare earths remain restricted.
An industry executive said that the restrictions on rare earth magnets were one of the reasons India became a net importer of auto parts in FY26.
India imported components worth $25.4 billion in FY26, a growth of 13%. Imports grew 7% in FY25, according to Acma data.
Build it yourself
The developments are prompting auto companies to look inward, with industry observers calling for greater technology ownership and localization.
“Chinese have overcapacity of cells and many other components. They will have to off take their own demand and they will not help other firms to gain expertise who can be their customers. Indian firms have to realize that they have to do things on their own,” Deepesh Rathore, founder and head of research at InsightEV, said.
The developments are also prompting calls for greater technology ownership and localization, even where raw materials and components remain difficult to source.
“Conversations have started in the industry but remains to be seen how the localization conversation materializes. You need to have ownership over at least some key technologies even if raw materials remain difficult. Lack of access to technology makes things difficult and makes one dependent,” said Ashim Sharma, senior partner at Nomura Research Institute.