India and China in Dialogue Over Rare Earth Materials Trade

The Indian government, through the Ministry of External Affairs (MEA), is actively engaged with China concerning supply chain issues related to rare earth materials. Addressing a weekly press briefing, MEA representatives revealed ongoing discussions with Chinese authorities in both Delhi and Beijing to address the streamlining of rare earth supply chains. The MEA is also addressing various economic and trade matters with China. The Commerce Secretary also mentioned India’s efforts, both commercially and diplomatically, to tackle the supply of rare earth minerals and ensure the continuation of essential imports. The Commerce Secretary also stated that the government is working with industry bodies such as SIAM and ACMA to facilitate discussions with their Chinese partners. It was also highlighted that China’s measures regarding rare earths are a global response. India’s Commerce and Industry Minister has described China’s rare earth export regulations as a global ‘wake-up call’. He stressed that India is looking to develop alternate supply chains and become a trusted partner for global businesses seeking to reduce dependence on Chinese suppliers. China holds a dominant position in the global rare earth market, processing more than 90% of the world’s magnet production capacity. This dominance creates vulnerabilities for industries worldwide, including automotive, home appliances, and renewable energy sectors. New Chinese export restrictions, which took effect on April 4, require special licenses for specific rare earth elements and related magnetic products. Furthermore, India and several Central Asian countries are exploring potential collaborations in the exploration of rare earth and critical minerals, as discussed at the recent India-Central Asia Dialogue. A Crisil Ratings report indicates that prolonged disruptions to the supply of these materials could impact India’s automotive sector.