Electronics industry sounds alarm over rare earth magnet crisis

China’s recent export restrictions on key rare earth elements have severely impacted India’s audio electronics industry, particularly the supply of NdFeB magnets used in devices like speakers, smartphones, and wearables.

According to Electronics Industries Association of India (ELCINA), over 21,000 jobs are at risk as manufacturers face rising costs, production delays, and are forced to import fully assembled modules from China. The disruptions threaten progress made under the Make in India initiative. India currently relies on China for 90% of its magnet needs.

China’s recent export restrictions on key rare earth elements are causing major disruptions across India’s audio electronics sector, placing over 21,000 jobs at risk and threatening to reverse the progress made under the government’s ‘Make in India’ initiative. The Electronics Industries Association of India (ELCINA) has warned that the restrictions could severely impact the country’s hearables, wearables, and speaker manufacturing industries, which are heavily dependent on Chinese supplies of rare earth magnets.

In April 2024, China implemented stricter export licensing rules for rare earth elements like terbium and dysprosium, which are crucial in manufacturing Neodymium-Iron-Boron (NdFeB) magnets. These high-performance magnets are integral components in a wide range of consumer electronics, including speakers, microphones, haptic motors, and camera modules with optical image stabilization (OIS). Although some final assembly for these components occurs in India, the magnets themselves are almost entirely itmpored—primarily from China, which accounts for nearly 90% of India’s total requirement.

ELCINA’s white paper submitted to the government highlights that supply disruptions are already affecting speaker manufacturing hubs in Noida, Chennai, and Pune. Many manufacturers, facing uncertainty and delays, are being forced to switch to importing fully assembled speaker modules from China. This shift undermines years of effort to localize production, build domestic capacity, and reduce reliance on imported finished goods.

The situation is especially concerning for India’s rapidly growing hearables and wearables segment. China’s curbs have led to increased production costs, longer lead times, and a shortage of critical components—resulting in a growing trend of assembly units reverting to finished imports. ELCINA estimates that between 5,000 to 6,000 direct jobs and an additional 15,000 indirect jobs in the speaker and audio component industry, particularly in Noida and southern India, are now at risk.

The association also flagged the new Chinese requirement for end-use declarations as a major bottleneck. Shipments of magnets, as well as finished goods containing embedded magnets, are being delayed at Chinese ports, disrupting Indian production schedules. These delays are already affecting supply chains for Indian TV and audio brands.

Although rare earth magnets constitute just 5–7% of the bill of materials for such products, their strategic importance is significant. Even though smartphones, for example, use a small quantity of rare earth magnets per unit, the high volume of production means that any disruption has outsized effects. 

Industry experts warn that prolonged shortages could lead to higher device costs, reduced availability of advanced features like OIS and haptics, and delays in market-ready product launches.

ELCINA stressed that India urgently needs to reduce its dependency on a geopolitically sensitive supply chain. While short-term plans involve diversifying rare earth sourcing from countries like Australia, Africa, and Myanmar, long-term resilience will require India to develop its own capacity for rare earth processing, refining, and magnet production.

Some Indian companies are already exploring alternative solutions. 

ELCINA has urged the government to take a multi-pronged strategic approach. It recommends initiating government-to-government (G2G) dialogues with China to negotiate possible exemptions—similar to those offered in the semiconductor sector. The association has also pushed for the inclusion of rare earth magnets and other critical minerals in India’s electronics component manufacturing scheme and suggested launching a dedicated production-linked incentive (PLI) scheme to support local manufacturing.

The association further emphasized the need to invest in research and development, as well as in recycling infrastructure, to reclaim rare earth materials from end-of-life products. Such efforts could help create a circular economy for critical components and reduce import dependency in the long-run.

In response to the escalating crisis, the Indian government is reportedly finalising a ₹3,500–5,000 crore scheme to boost domestic production of rare earth minerals and the magnets made from them. The scheme aims to incentivise local production and reduce the country’s heavy reliance on Chinese imports. This follows a global pattern, as industries in the United States and Europe are also grappling with similar shortages after China’s export tightening.

With India aiming to become a global manufacturing hub for electronics, including smartphones, TVs, and wearable devices, securing a stable and resilient supply of rare earth magnets is essential. Industry stakeholders agree that a mix of policy support, diplomatic engagement, and domestic capability building will be necessary to safeguard jobs, protect ongoing investments, and maintain momentum in one of India’s most promising high-growth sectors.