India’s electric vehicle (EV) ambitions face a major setback following China’s April 2025 decision to tighten export restrictions on rare earth magnets which is a critical components used in EV motors. Though these magnets account for less than 5% of a vehicle’s cost, their scarcity could bring manufacturing to a standstill.What’s Happening?New Beijing licensing requirements : China now mandates licenses, detailed end-use disclosures, and military non-use guarantees for seven rare earth magnets and alloys, including samarium, terbium, dysprosium, neodymium, extending approval times to at least 45 days.Crippling delays : By May 2025, India had cleared roughly 30 import requests at home but none approved by China , leaving automakers empty-handed.Maruti Suzuki has decided to cut its production estimate for e-Vitara by almost two-thirds for the first half of FY26.Ripple Effect on Indian EV IndustryProduction bottlenecks : Vehicle rollouts, including dozens of new EVs, and major two-wheeler launches could be delayed by July 2025 due to low magnet inventory.OEM impact : Maruti Suzuki has already slashed its e‑Vitara six-month production target by two-thirds (from approx. 26,500 to approx. 8,200 units) attributable directly to magnet shortages.Potential price increases : Analysts predict a 5–8% cost bump for EVs and scooters as shortages tighten pricing dynamics.Strategic Implications & ResponseRisk of supply chain vulnerability : India’s reliance on China has climbed; over 80–90% of its 540 tons of magnet imports came from China last fiscal year.Government interventions :Offering production-linked incentives to domestic rare-earth magnet manufacturers.Amending mining regulation (MMDR Act) to unlock critical mineral exploration.Planning stockpiling of strategic materials and promoting recycling initiatives.Conducting diplomatic outreach to expedite Chinese export approvals.Broader Industry RisksAutomotive ecosystem at risk : Shortages could ripple into ICE vehicles, locking up components like power steering and starters.Strategy to diversify : OEMs are scouting alternative magnet suppliers in Vietnam, Indonesia, Japan, Australia, and the U.S..Domestic capacity challenge : Although India holds approx. 6.9 Mt of rare-earth reserves, processing infrastructure remains limited. Scaling up will take years.What It Means for India’s EV RoadmapShort-term delays : Expect production slowdowns and launch postponements from July to September 2025 if magnet imports remain blocked.Moderate price inflation : Increased costs will likely be passed down, affecting consumer buying patterns.Policy acceleration : The crisis is expected to expedite "Atmanirbhar Bharat" strategies for critical minerals and processing capabilities.