Tata Motors, Mahindra & Mahindra shares fell on Friday due to this move from China

Shares of Tata Motors Ltd. and Mahindra & Mahindra Ltd. have given up early gains on Friday, April 25, after sources told CNBC-TV18 that China has stopped the supply of rare earth magnets to India.

Industry sources said that Indian EV and component makers are facing production challenges because of this move from China.

As a result of this move, the automobile and component manufacturers have approached the government for help.

China, according to sources, has restricted the supply of rare earth magnets to India from April 4, and is now demanding end user certificates for releasing any exports of rare earth magnets, which are duly authorised.

The neighbour nation has also stated that importers must get end user certificates signed by both India's foreign ministry and the Chinese embassy. The importers will also have to confirm that the rare earth magnets will not be used for making weapons or given to a third party.

Rare earth magnets are a key part of traction motors and other components of the electric vehicles and automobiles.

At the end of the third quarter, Tata Motors had seen an increase of 23% in EV registrations led by new products that contributed to growth.

Shares of Tata Motors have given up early gains and are now trading 2% lower at ₹655.55, while those of M&M also had a similar reaction, currently trading 1.7% lower at ₹2,856.7

(Newsbreak by Parikshit Luthra.)