Automakers urge Indian govt for diplomatic outreach to China for rare earths

The issue: China has paused exports to India of rare earth minerals, which are key to electric vehicle (EV) production, and are also not approving Indian companies’ fresh applications for their export. If the minerals don’t start showing up on Indian shores soon, it is likely to hit the auto industry hard, especially EVs.

Indian EV makers have now urged the Centre to engage Beijing through diplomatic channels, mirroring American efforts. On Wednesday, US President Donald Trump announced on his Truth Social platform that the US and China have struck a ‘deal’ that will see China resume supply of magnets and rare earths to the US.

“An escalation from Indian authorities might be required," said one of the executives cited above on condition of anonymity. “What would we do with the visa if there is no meeting fixed?" An appointment with China’s ministry of commerce is key, since it is responsible for the restrictions on the export of rare earth minerals and magnets.

The two executives cited above said industry representatives met commerce and industry minister Piyush Goyal on Sunday before he left for Switzerland. They also made a presentation on Tuesday to senior officials at the Directorate General of Foreign Trade (DGFT), to request them for help in securing an appointment with the Chinese.

The presentation, a copy of whichMinthas seen, notes that the industry delegation will request Chinese authorities to expedite licences for exporters of rare earth magnets to India. A footnote in the presentation also noted that India’s ministry of commerce and industry was engaging with the Indian embassy in China to facilitate the meeting.

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The auto industry was represented at these meetings by the Society of Indian Automotive Manufacturers (SIAM), Automotive Component Manufacturers Association of India (ACMA), and executives from Tata Motors, Mahindra & Mahindra, JSW MG Motor India, Maruti Suzuki, and Gujarat Mineral Development Corporation (GMDC), among others.

Queries emailed to these organisations, commerce and industry minister Piyush Goyal’s office, and the DGFT remained unanswered till press time.

Support assured

To be sure, at the meetings, the Indian leadership assured support to the auto industry, including assistance in developing a local rare earth production base. GMDC has been involved in rare earth exploration in India for some time now, and it was mooted to use the company’s expertise. Other companies already present in the trade also offered to ramp up their production.

However, there was no mention of a direct outreach from the political leadership to China at these meetings, the two sources said.

“For India, while we may have a problem with permanent magnets in the short run, we are already engaged with industry and with our startup ecosystem to find solutions," Goyal toldThe Economic Timesin an interview published on Thursday. “And I assure you that we are solving this problem."

Also read |  Maruti Suzuki pulls back on EV push amid rare earths crisis

During the consultations, automakers also cited examples of authorities from the west reaching out to Chinese officials, including US President Donald Trump and European Union trade commissioner Maroš Šefčovič, the first executive cited above said. To be sure, apart from the US and China reaching an agreement on a trade framework that may help in sorting the matter, the Chinese commerce ministry said on Sunday that it is willing to fast-track applications of European Union firms.

Solutions to be political

Manoj Kewalramani, the chair for Indo-Pacific Studies Programme at the Takshashila Institution, a public policy school in Bengaluru, agreed that the solution to the current situation will be achieved through political means, especially considering the history between the two countries. “In trade negotiations like these, both sides have in mind the question: How much is the situation hurting the other side politically?" he said.

While China is holding the rare earth card, India also has leverage in terms of its high trade deficit with the Middle Kingdom. India’s trade deficit with China widened to a record in FY25, just a whisker below $100 billion, as per data from the commerce ministry. “The US deal with China could quicken the process of reaching a solution soon," Kewalramani said.

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Unless a quick resolution to the crisis is reached, automakers would be forced to curtail production, the industry sources said. Maruti Suzuki, the latest entrant in India’s EV market, slashed production targets for e-Vitara, its first electric vehicle, by two-thirds because of the rare earth magnet shortages,Reutersreported on Tuesday.

When contacted, a spokesperson for Maruti Suzuki said that while the situation was uncertain, so far there was no disruption to its operations due to the rare earth crisis.

Also read | China’s rare earths aren’t as rare as you think