Summary 

1. Low Impact on Auto Sector: Over 95% of India’s vehicles are internal combustion engine (ICE) vehicles, using minimal rare earth materials (0.1 kg per vehicle), making the sector largely unaffected by China’s export curbs.

2. EV and Hybrid Vulnerability: Electric vehicles (EVs) and hybrids rely heavily on rare earths (0.8 kg for EVs, 0.5 kg for hybrids) for Permanent Magnet Synchronous Motors (PMSMs), facing production risks.

3. China’s Restrictions: Since April 2025, China (controlling 90% of global REM processing) imposed export curbs on seven rare earth elements (e.g., samarium, gadolinium), requiring end-user certification, causing delays.

4. EV Penetration: EVs constitute 7% of two-wheelers and 3% of passenger vehicles, with a 25% CAGR in sales from FY23 to FY25, indicating growing but limited exposure.

5. Response Strategies: India is exploring alternative supply chains and diplomatic solutions to mitigate REM dependency and support EV growth.

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