Rare earths: China is choking its own prospects of leadership
Bejing’s supply squeeze has left electric vehicle (EV) makers in India short of rare earth magnets. While we need both alternatives and investments in a supply chain of our own, China needs to think again.
To what extent can the government help India’s auto industry import rare earth magnets from China? Though these have various uses, local makers of electric vehicles (EVs) have been reeling under Beijing’s export squeeze. Many vital rare earth minerals have lately been under a Chinese chokehold.
While the US was assured supplies in lieu of eased curbs on its own high-tech exports to China as part of a truce struck last week, our auto businesses have been left in the lurch so far.
Also Read: Mint Quick Edit | Will the China-US truce spell rare-earth relief?
China’s restrictive policy purports to prevent misuse; its mandarins demand end-use certification that the items will not go into weapons. This acts as an export barrier, one that our auto companies want lowered. But getting Beijing to do so is a challenge, given New Delhi’s uneasy relations with it.
Reports suggest that the government might help private businesses follow up on sourcing applications made to Chinese authorities, but we have had no word on any official engagement. Scarcity has already hit EV production plans in India. Not only must we double down on self-sufficiency, but remind China of what’s actually at stake.
According to rating agency Icra, India imported around $200 million worth of rare earth magnets in 2024-25. “While the trade value may appear modest, the strategic dependence it reflects is anything but," said the Icra report.
Also Read: China risks overplaying its hand by curbing rare earth exports
How China came to dominate this input industry is a story of neglect by others. China had first tried to weaponize its rare earth heft back in 2010, after a diplomatic row with Japan. This should have made all users scurry for other options.
In 2012, as reported by Hindustan Times, a panel set up by the Indian government came up with a strategy document for India to indigenize rare earth supplies. Unfortunately, more than a decade later, little progress has been made. Meanwhile, China has honed its skills of unearthing and putting these minerals to use; the country processes more than 90% of rare earths used for magnets in EV motors globally, even as demand soars on the back of a global drive for clean energy.
Also Read: Barry Eichengreen: US export curbs on high-tech enablers have rarely worked
Since India does have some rare earth reserves, and even a state-run firm called Indian Rare Earths Ltd focused on them, it is imperative that we invest deeply in reducing our import dependence.
A renewed push has been made under the National Critical Mineral Mission, but it will take time to show results. Exploration, extraction and processing all demand expertise shaped and sharpened by experience. In the interim, carmakers are on a hunt for workarounds.
EV motors can be made without rare earth magnets, but such technologies need to be perfected. China’s supply curbs may already have sparked innovation across the world. As reported, Indian R&D efforts are being made too. With luck, acceptably efficient alternatives could emerge within a few years.
That would still be too late to address today’s shortfall.
India’s adoption of EVs is lagging expectations and we must not let them slip into a slower lane. While no stone should be left unturned to develop substitutes and eventually also a local supply chain for rare earth magnets, this deprivation prompts reflection on the importance of open trade for the whole planet’s future.
Climate change is a threat that demands global cooperation on all fronts, clean-tech included. For China to claim that its success is good for the world, as America long did, it must lift its near-embargo. It gives Beijing leverage over others, but its deployment as a geopolitical weapon is the real misuse history will note.
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