India and Australia are intensifying efforts to fortify electric vehicle (EV) supply chains by moving away from an overreliance on China-dominated rare-earth magnet production, in the wake of recent export constraints that exposed vulnerabilities in critical component sourcing.

The rare-earth magnets used in EV motors—primarily neodymium-iron-boron types—are essential to modern electric drivetrains, yet global processing and supply remain heavily concentrated in China.

This concentration has prompted both governments and industry stakeholders to reassess existing dependencies and pursue diversified, resilient supply chains.

Recent discussions under the India–Australia Critical Minerals Investment Partnership aim to develop coordinated mining, refining and processing ventures that could supply alternative sources of rare-earth materials and finished magnets.

India’s EV sector has felt the impact of rare-earth supply disruptions; export controls and licensing requirements imposed by China earlier in 2025 slowed shipments of rare-earth magnets, threatening production timelines and nudging EV manufacturers to adapt supply strategies.

While Beijing later eased some export restrictions, the episode highlighted the fragility of a supply chain overly dependent on a single supplier and underscored the urgency of diversification.

Analysts have noted that even temporary bottlenecks can disrupt production schedules and stoke price volatility, even though magnets themselves contribute a small share of total vehicle cost.

In response, India has accelerated domestic strategy with government backing for rare-earth exploration, processing capability development and strategic stockpiling, while exploring partnerships with mineral-rich nations including Australia, Argentina, Brazil and others.

Australian projects such as the Nolans rare-earth mine and emerging refining capacity backed by Canberra are positioned as potential anchors for a non-Chinese supply base, with both countries exploring joint ventures and technology exchange to create a more integrated rare-earth ecosystem.

Industry and government leaders argue that a diversified supply chain—combining domestic development with international partnerships—will not only reduce strategic exposure to export shocks but also contribute to broader industrial objectives, from EV manufacturing and clean energy technologies to defence and high-tech sectors.

As discussions evolve into concrete investment plans and pilot initiatives, India and Australia aim to support global market stability and enhance competitive alternatives to the existing dominant supply framework.