As China tightens control over rare earths, the Indian electronics and EV manufacturers struggle to secure critical inputs.
India’s electronics component production targets have come under pressure following recent global supply chain disruptions in rare earth elements. Manufacturers under the government’s ₹229.19 billion Electronics Component Manufacturing Scheme (ECMS) are reportedly facing challenges in meeting their first-year performance benchmarks due to limited availability of critical rare earth components.
Nearly 10 firms from over 100 approved applicants are understood to have raised concerns over their ability to fulfil mandated targets linked to capital investment, output, and employment. Many are re-evaluating sourcing strategies, with a few considering direct import of key components to avoid further delays in production.
The trigger for this situation stems from China’s decision to curb exports of several rare earth elements essential for electronic and automotive manufacturing. The elements affected include dysprosium, terbium, and gadolinium, which are used in magnets, electric motors, and other critical subassemblies. As a result, Indian manufacturers across the electronics, EV, and automotive sectors are facing delays in procurement.
The disruption has already impacted production at facilities such as a major electronics assembly plant in Telangana, which has reported a bottleneck due to shortages in specialised magnetic materials. Additionally, vehicle manufacturers are reportedly revisiting timelines for upcoming models due to uncertainty in component supply.
In response, the government is drafting a ₹1,3.45 billion scheme aimed at encouraging domestic magnet manufacturing. The initiative, currently under inter-ministerial consultation, is expected to offer end-to-end support to selected firms capable of processing rare earth oxides into usable components.
Despite being the fifth-largest holder of rare earth reserves globally, India’s mining and processing capabilities remain underdeveloped. Regulatory challenges, limited infrastructure, and environmental sensitivities have delayed progress.
