India’s best-selling electric scooter, the Chetak from Bajaj Auto, experienced a significant speed bump in July. Production plans were hampered by a shortage of rare earth metals, forcing the company to almost half-measure its output.
Due to rare earth shortages, Bajaj only produced 10, 824 Chetak units in July, compared to 20, 384 during the same time last year.
Rakesh Sharma, executive director of Bajaj Auto, stated to Al Jazeera that the supply situation for rare earth magnets had contributed to the possibility of a sharp decline in production in July.
According to Sharma, the business has since quickly redesigned some motors to use light, rare-earth magnets, and has been overhauling supply chains to meet its needs.
“These adjustments helped us recover nearly half of our anticipated two-wheel electric output for July.” In August and September, we anticipate a production increase of about 60%.
After China imposed restrictions on its rare earth exports on April 4, two days after President Donald Trump announced reciprocal tariffs on April 2, Bajaj is facing an industry-wide shortage. Since then, no shipment has arrived in India, putting the fate of the automotive and other industries.
The Federation of Automobile Dealers Association (FADA), which has about 15, 000 auto retailers as members, presidents Vigneshwar Chittur Selvakumar and Vigneshwar Chittur Selvakumar, expresses concern over how the automobile industry’s shortages “may have a drastic impact on the industry.”
Any decline in production will have a negative impact on our business because we control about 80% of the vehicle sales, Vigneshwar said.
A total of 17 metallic elements, including dysprosium, terbium, europium, samarium, and gadolinium, are found in abundance in China, which has the largest reserves of rare earth elements in the world, which is estimated to be 44 million tonnes, and which accounts for 90% of the rare earth elements processing capacity.
The metals are also used in smartphones, computer screens, and other electronic devices besides EVs. They are also necessary for medical devices like magnetic resonance imaging systems, as well as defense-related devices like radar and guidance systems.
Aman Bir Singh, an EV consultant, told Al Jazeera, “The rare earth elements help to make strong magnets that are widely used in electric vehicles… to maintain a stable magnetic field. “Internal combustion engines (ICE) or hybrid vehicles that run on gasoline, diesel, and wind turbines are also used, but in a very small quantity, and the current shortage doesn’t impact them as much,” they say.
The shortage comes just as the EV market in India experienced its first-ever sales surpassing $2 million in 2024. Sales of 1. 6 million vehicles increased by 24 percent in 2023. With sales of 1.2 million last year, Two-Wheelers dominated that category.
More than 100, 000 electric cars were sold in the financial year that ended on March 31, 2025, which is also increasing sales. Tesla joined the movement in July, and she also unveiled its Model Y in the nation. In consequence, according to a report from CareEdge Analytics &, Advisory in July, the penetration of electric cars has more than doubled over the past two years, increasing from 1% to 2.6 percent.
However, a number of EV companies have stayed away from discussing the rare earth crisis.
According to Nilanjan Banik, an economics professor at Mahindra University, “the industry is still in a young state, and companies fear that they may lose customers and their share value if they concede to a rare earth shortage because potential buyers may be too apprehensive to purchase the vehicles.”
Due to their superior performance and compact size, the television industry is also affected by the shortage. Rare-earth magnets are crucial in the production of televisions, especially for speakers.
This presents a clear challenge, according to Arjun Bajaj, director of Videotex – television manufacturers for various reputable brands. The country is still heavily dependent on imports for these components. The industry is actively looking into alternatives like ferrite magnets, he continued, “While we currently have sufficient stocks for the current season, our focus is also on finding an alternative solution.” “But to match the performance of rare-earth magnets will require continued research and technological upgrades,” he continued.
Relief for India
After holding talks with Indian Foreign Minister S. Jaishankar in Beijing on August 19, China announced that it would ease export restrictions on fertilisers, rare earths, and tunnel-boring equipment to India.
However, this was referred to as a “tactical gesture” by experts.
In the previous fiscal year, India’s trade deficit with China was a record $100 billion. In a recent clash between New Delhi and Islamabad in May, Beijing has also publicly supported India’s archrival, Pakistan, as a reminder that India’s dependence on China poses a risk for it.
The founder of the trade research group Global Research Trade Initiative (GTRI), Ajay Srivastava, said that “India’s dependence on China gives]the latter] significant leverage during crises.
“China now meets the needs of India in a number of crucial areas. Chinese imports are also a major industry player, accounting for 86% of all sales of everyday items like laptops and flat-panel displays. India’s share of bilateral trade has dropped to just 11.2 percent from 42.3% two decades ago, demonstrating how fragile supply chains are. The easement of the supply of rare earths is only a tactical move, according to Srivastava.
India, which has 8.52 million tonnes of rare earth elements, accounts for less than 1% of the world’s rare earth mining because it faces significant challenges due to its limited infrastructure, technological advancements, regulatory obstacles, and environmental concerns. It also has the fifth-largest number of rare earth elements.
According to Vishwas Dass, a policy expert from Delhi, the current disruption must be harnessed to promote domestic exploration, encourage capacity refining, and form mineral alliances with trusted partners.
Assam and West Bengal have already seen the start of exploration by the Geological Survey of India (GSI).
Asit Saha, director general of GSI, stated to Al Jazeera that the exploration is in line with India’s long-term strategic plan to achieve self-reliance in key sectors and that it is consistent with the government’s policy of securing domestic mineral supplies for additional technological and industrial needs.
