Bern, June 9 (PTI) China's restrictions on the export of rare earth elements and related magnets would affect the domestic auto and white goods sectors in the short term but the government and the industry are working actively on solutions, including diplomatic engagement, Commerce and Industry Minister Piyush Goyal said on Monday.

Goyal, who is on an official visit to meet Swiss leaders and businesses here, also said that the Indian embassy is in dialogue with China and the commerce ministry is also working on the issue.

The automobile industry has sought government support in expediting approvals from the Chinese government for importing rare earth magnets used in various applications, including passenger cars.

As per the industry sources, various domestic suppliers have already sought approval from the Chinese government through their local vendors in China.

However, no approvals have been granted so far, sources said. China controls over 90 per cent of the global processing capacity for magnets, used across multiple sectors including automobiles, home appliances and clean energy.

The Chinese government has put restrictions, with effect from April 4, mandating special export licences for seven rare earth elements and related magnets.

"Obviously, there are issues around the stopping of permanent magnets from China to India, which will affect our auto sector, particularly, and several white gods and other sectors … Some companies have put in their applications, and we hope that good sense should prevail and they will get their approvals for permanent magnets," he told reporters here.

He added that the government is working on several other tracks to see the availability of these goods from alternate sources.

They are also looking at Indian Rare Earths Limited by providing the necessary materials to be able to develop, speed up the development of domestic products, Goyal said adding, "In a way, it's a wake-up call for all those who have become over-reliant on certain geographies. It's a wake up call for the whole world that you need trusted partners in your supply chain".

He said that India is now becoming the alternative that the world is looking up to.

When asked if the government is considering a PLI (production-linked incentive) scheme for the sector, the minister said he has discussed the matter with all the auto companies and they are "very" confident about solving this problem.

"They are in dialogue with our innovators, startups and they say they will take care of any funding requirement or pricing correction that may need to encourage faster roll out and growth of this sector," Goyal said.

More and more Indian industry is coming out of the old mindset that the government subsidies and crutches only will not run "our show" and they are becoming bigger and bolder, he noted.

On alternative sources, Goyal said that there could be some technologies that India is developing.

"So the government, the industry and startups and innovators are all working as a team and we are confident that there may be a problem in the short run but we will emerge winners in the mid to long runs," he said.

There is an opportunity even in this crisis and problem, he said.

"Because more and more companies and businesses and people in India will recognise that it is important to be self-reliant, it’s important to have trusted partners in your supply chains and more and more the world today is wanting India to be in their supply chain today because today we are seeing as a trusted partner," he added.

Critical materials include samarium, gadolinium, terbium, dysprosium and lutetium, which are essential in electric motors, braking systems, smartphones and missile technology. PTI RR MR MR

Export restrictions on rare earths prompt India to pursue diplomatic engagement and accelerate domestic supply-chain alternatives. China's restrictions require special export licences for seven rare earth elements and related magnets, causing short-term disruption to India's auto and white goods sectors. Indian suppliers have applied for approvals through local Chinese vendors but none have been granted; the Indian embassy and commerce ministry are engaging diplomatically. The government and industry are pursuing alternate suppliers, accelerating domestic production via entities like Indian Rare Earths Limited, and considering incentives to scale local manufacture and support startups to reduce geographic dependence and strengthen supply-chain resilience.