Rare earth supply: China unlocks shipments to India after 6 months — Which companies can import?

After six months of uncertainty, China has resumed shipments of heavy rare earth magnets to India, offering much-needed relief to manufacturers in the electric vehicle, renewable energy and consumer electronics sectors.

However, the shipments come with a key condition, the cargo cannot be re-exported to the United States. The supply flow had earlier been halted amid escalating trade tensions between Beijing and Washington.

People aware of the matter told ET that China has allowed exports to four companies in India: Hitachi, Continental, Jay-Ushin and DE Diamonds, after they received clearances from local authorities. The approvals come with strict caveats: the magnets cannot be re-exported to the United States and cannot be used for military purposes.

Meanwhile, China and the US remain locked in a trade dispute, even as both sides recently signalled a willingness to ease pressure following a meeting between US President Donald Trump and Chinese President Xi Jinping, earlier on Thursday.

Before granting permissions, China sought end-user certificates (EUC) from Indian firms. These documents assure that the magnets will not be used for manufacturing weapons and will serve only domestic demand. Indian manufacturers had already submitted the required EUCs, but more than 50 applications were awaiting clearance from China’s Ministry of Commerce until now.

“There seems to be some easing in supplies. Four companies have got approvals for importing rare earth magnets,” a senior industry executive told ET. The executive added that direct flights between Kolkata and Guangzhou have resumed this week, which could improve logistics.

The MEA also acknowledged the development. Spokesperson Randhir Jaiswal confirmed that Indian companies have begun receiving licences from China to import rare earth magnets. However, he cautioned, “We have to look at how the US and China talks will play into our domain.”

Rare earth magnets are vital for EV motors and equipment used in renewable energy, aerospace and defence. India’s EV industry alone is one of the biggest consumers of these components. China accounts for about 90% of global production, giving Beijing significant leverage in the supply chain.

On 4 April, China announced export controls on medium and heavy rare earth-related items, citing national security concerns. The move came after President Trump imposed tariffs on Beijing. The new rules require exporters to secure a licence from China’s commerce department, with buyers guaranteeing that the materials will not be used for “storing, manufacturing, producing, or processing weapons of mass destruction and their delivery systems”.

While China gradually resumed shipments to Europe and Southeast Asia over recent months, vendors supplying India continued to face delays. India imported 870 tonnes of rare earth magnets worth Rs 306 crore in FY25, as per an ET report.

Earlier on Thursday, Trump revealed that he and Xi had agreed on a one-year deal for the supply of crucial rare earth materials, a development that could have influenced Beijing’s decision to begin clearing pending applications.

With approvals now granted, Indian manufacturers expect partial relief, though they remain cautious given the geopolitical sensitivities tied to rare earths.