India's Rare-Earth Shock Spurs Supply-Chain Resilience

A 2025 rare-earth export clampdown exposed critical vulnerabilities in India's automotive and EV supply chains and accelerated a shift from efficiency-driven sourcing to resilience and localisation.

The abrupt restriction on exports by dominant processors forced production halts, redesigns and cost increases. Several OEMs, including Bajaj Auto, TVS and Maruti Suzuki, reported disruptions; Bajaj's Chetak output fell to 10,824 units in July from 20,384 a year earlier. Firms responded by seeking alternative suppliers, redesigning motors to rely on light rare earths and pushing diversification of sourcing.

The crisis fast-tracked development of rare-earth-free motor technologies-synchronous reluctance, induction and ferrite-assisted designs-and pilots from companies such as Chara Technologies, Tsuyo Manufacturing and Sona Comstar. Industry leaders stress that policy support and OEM adoption are needed for these architectures to scale into SOP platforms.

The government announced a Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets with a ₹7,280 crore outlay to build about 6,000 tpa integrated REPM capacity, aiming to lower import dependence. Recycling and domestic refining are emerging as strategic levers; firms like Attero and MiniMines are recovering neodymium, samarium and other critical minerals from end-of-life batteries to create ‘urban mining’ feedstocks.

As 2026 begins, focus has shifted to building resilient, diversified supply chains, stronger domestic processing and technology alternatives to reduce geopolitical risk.