In the wake of increasing worries about China's latest export ban on rare earth minerals, especially targeting India's automotive industry, New Delhi affirmed continued diplomatic action to ensure a stable and predictable trade regime.
Referring to the problem in a press conference on Thursday, Ministry of External Affairs spokesman Randhir Jaiswal said India is actively engaging with Chinese officials.
As you may know, in the early part of April, China's Ministry of Commerce and General Administration of Customs made a declaration that it would impose export controls on some rare earth-related products. We are pursuing the Chinese side, both here in Delhi as well as Beijing, to bring predictability into the supply chain for trade as is normal internationally," Jaiswal explained.
China's new policy requiring export licenses for seven rare earth elements and certain magnet products has raised alarm among Indian industries, particularly automakers, as they heavily depend on their imports. During the last fiscal year, more than 80% of India's 540-tonne imports of magnets were from China.
To reduce near-term disruptions, the Indian automakers and government are taking a two-pronged strategy. Short-term measures include strategic stockpiling, supplier base diversification, and ramping up local assembly through PLI schemes.
For long-term strength, India is focusing on indigenous capability building. This encompasses accelerating exploration for rare earth reserves, augmenting domestic manufacturing capabilities, and investing in recycling of rare earth technology.
In a broader strategic move earlier this month, India and five Central Asian nations discussed collaboration in the exploration and development of critical minerals. This initiative aligns with New Delhi’s broader aim to cut its over-reliance on China, the global leader in rare earth exports.
To stimulate local production, the Indian government is said to be considering fiscal incentives tied to output of production, to induce players to venture in or expand within the rare earth industry.
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