China’s foreign minister, who is in India for official discussions, has reportedly assured that Beijing will address key concerns raised by New Delhi, particularly the supply of rare earth magnets, key inputs for automakers, as well as tunnel boring machines.
The shortage of rare earths has been a pressing challenge for automobile manufacturers. With China controlling nearly 90 percent of global production, supply constraints have already disrupted output across the sector.
If these assurances translate into action, automakers may gain critical relief from supply bottlenecks that have strained production schedules, just as domestic demand is expected to improve on hopes of a possible GST reduction.
Reflecting this optimism, auto stocks climbed further on Tuesday. Shares of Ola Electric, Bajaj Auto, Hero MotoCorp, and others rose more than 8 percent, while the Nifty Auto index advanced 1 percent, extending Monday’s nearly 5 percent rally on GST cut speculation.
In April, China imposed a temporary ban on the export of seven key rare earth metals, along with the powerful magnets produced from some of them. The move triggered acute shortages that threatened manufacturing units in the US and Europe, while Indian automakers were left with barely a month’s worth of fresh supplies from China.
The restriction, announced on 4th April, meant that Indian auto component manufacturers had access to only about 90 days of inventory. Beyond this period, companies were required to obtain new export licences from Beijing.
What are these Rare Earths? Rare earths are a group of 17 types of metals found in the Earth’s crust. They include 15 lanthanides, along with scandium and yttrium.
Interestingly, these elements are not truly “rare”; they are relatively widespread across the globe. What makes them rare is the complexity and cost of extraction. They are rarely found in concentrated deposits and often require over 100 stages of processing to be separated and refined, making them both resource- and energy-intensive.
Despite these challenges, rare earths are critical to modern technology. They are essential for producing powerful magnets used in electric vehicle motors and wind turbines. Beyond clean energy, they also play a role in everyday devices like smartphones, computer screens, and even in medical equipment such as MRI machines.
| Auto Stock | Today’s high (%) |
| Maruti Suzuki | 1% |
| Eicher Motors | 1.4% |
| Hero MotoCorp | 2.3% |
| Bajaj Auto | 3% |
| Hyundai Motor | 4% |
| Ola Electric | 8.5% |
Written by Shivani Singh
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