China’s commerce ministry said on Saturday that it has approved a certain number of compliant rare earth export applications and will continue to refine its examination and approval process. The ministry also expressed willingness to enhance communication with other countries over export controls, according to a statement on its website, Reuters reported.

The announcement comes at a time when Indian automakers are facing worsening shortages of rare earth magnets, critical components for electric vehicles (EVs) and other high-tech industries. According to Bloomberg, Beijing has turned down at least two recent applications for India-bound shipments of rare earth magnets, raising fears of an imminent disruption in Indian automobile production.

Industry and government officials told Bloomberg that while shipments to the German and U.S. units of a global firm were cleared, the same request to its Indian arm was rejected. Since April 4—when China began enforcing tighter curbs on exports of seven rare earth elements—supplies to Indian auto parts manufacturers have been stuck at Chinese ports.

These new controls require importers to certify that the magnets will not be used for defense purposes or re-exported to the U.S. The new end-user certification process can take at least 45 days and is now facing a global backlog. As per the Bloomberg report, at least 30 Indian applications endorsed by the Indian government are still awaiting Chinese approval, while over 10 applications from other countries have reportedly been cleared.

According to a May 28 presentation by the Society of Indian Automobile Manufacturers (SIAM), no Indian applications have received final approval from China’s commerce ministry despite many having secured embassy endorsements. “Even if one magnetised part is missing, the vehicle cannot be built,” SIAM warned in the presentation, adding that some Indian firms may consider shifting operations to China if the supply crunch continues.

The squeeze has heightened concern among Indian automakers. “The rare earth situation is a very difficult one,” Bajaj Auto’s Executive Director Rakesh Sharma told analysts. “Supplies and stocks are getting depleted as we speak, and if there’s no relief in shipments, production will be seriously impaired in July.”

To address the growing crisis, a delegation of Indian businesses is planning to visit Chinese counterparts this month with help from the Indian Embassy in Beijing. The embassy has reached out to China’s commerce ministry, seeking expedited clearance of pending applications.

China’s commerce ministry also announced progress in rare earth export approvals for EU firms and aims to finalize its trade investigation on EU brandy imports by July 5. During talks between Commerce Minister Wang Wentao and EU Trade Commissioner Maros Sefcovic, both sides also advanced price consultations on Chinese electric vehicles exported to the EU.

China expressed willingness to speed up export approvals through a “green channel” and strengthen communication on rare earth controls amid rising demand from sectors like robotics and EVs. The ministry urged the EU to facilitate compliant trade in high-tech products, addressing tensions caused by Chinese anti-dumping duties on European brandy and EU tariffs on Chinese EVs. Chinese authorities are reviewing price commitment agreements with French brandy producers and expect a final announcement soon. The EU and China are also exploring new technical approaches for EV trade beyond tariffs.

With inputs from agencies

Source: The Economic Times.