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China is trying to slow down India's growing success in manufacturing and exports, especially as India is quickly becoming a strong alternative to China in the global supply chain. About two months ago, China stopped sending rare earth magnets to India. These magnets are very important parts used in making cars, electronics, and defence equipment. Now, China is also restricting the supply of special fertilizers that help grow fruits and vegetables in India.
Over the past four to five years, India has become a major supplier of electronics, especially smartphones, to big markets like the US. As India's role grows, China's share in these markets is shrinking.
For example, in April this year, when Apple smartphones were imported into the US, only 27 per cent came from China, while a surprising 57 per cent came from India.
This shift started during the first term of US President Donald Trump, when trade tensions between the US and China began. Since then, India's exports to the US have gone up steadily.
In 2019, India exported goods worth USD 54 billion to the US. By 2024, this number had jumped to USD 90 billion. In May this year, China's exports to the US dropped by 34 per cent compared to May last year. Meanwhile, India's exports to the US went up by 17 per cent during the same time.
India is clearly gaining ground in global trade, and China doesn't seem too happy about it. Beijing wants to disrupt India's manufacturing growth
Foreign trade experts say that rare earth magnets are important for making products in the automobile (especially electric vehicles) and electronics industries two areas where India's manufacturing is growing fast.
In fact, in May this year, India's electronics exports went up by 54 per cent compared to the same time last year.
India is also on its way to becoming a major semiconductor manufacturer, and rare earth magnets are needed in that process too.
Experts believe that China is blocking the supply of these magnets to India on purpose, to slow down India's growth in these key sectors. Interestingly, China has already resumed supplying rare earth magnets to other countries but not to India.
This shows that the issue is not about a global shortage, but likely a targeted move to interrupt India's progress in electronics, electric vehicles, and semiconductor manufacturing. Fruits and vegetables now play a bigger role in India's agricultural exports
Trade experts say that India's agricultural exports have grown quickly in the past few years, and fruits and vegetables are now a bigger part of that growth.
In 2019–20, India exported farm products worth USD 35 billion, and by 2024–25, that number increased to USD 51 billion.
Now, China has also stopped sending certain fertilizers to India, fertilizers that Indian farmers use to grow more fruits and vegetables.
In response, Indian businesses and the government have started looking for other countries to supply rare earth magnets. They are also working on developing local alternatives to reduce India's dependence on China for such important materials and products.