India closely watches US-China trade talks amid rare earth tensions
As trade negotiations between the United States (US) and China near a 90-day deadline, global concerns over rare earth supply chains are intensifying. The US has indicated a possible easing of technology export restrictions in exchange for improved access to rare earth shipments from China, but observers remain cautious about the likelihood of immediate progress.
The rare earth dispute has prompted countries to reassess their reliance on Chinese supplies. The US has announced a $39 million investment to develop a domestic
rare earth supply chain
. India, while not directly involved in the negotiations, is exploring options to reduce its dependence on China, though progress remains limited.
Industry impact and government response
The Indian automobile and electronics sectors have started to feel the effects of supply constraints. Auto and smartphone manufacturers are reporting falling inventories of rare earth materials and magnets, with potential production cuts expected as early as June.
A recent report by Crisil Ratings highlighted the risk to India's electric vehicle (EV) rollout, noting that several new EV models rely on permanent magnet synchronous motor (PMSM) platforms. While most automakers currently maintain four to six weeks of inventory, a continued shortage could impact production schedules from July.
Maruti Suzuki is reported to be adjusting its production plans for its upcoming e VITARA model, reducing output targets for the July–September period due to shortages of rare earth magnets.
Diversification efforts underway
India has responded by stepping up support for Indian Rare Earths Limited and seeking international partnerships. At the India-Central Asia Dialogue held in New Delhi, India and five Central Asian countries expressed interest in collaborating on critical mineral exploration. They also proposed convening the India-Central Asia Rare Earth Forum to advance these discussions.
While India is not a direct participant in the ongoing US-China talks, it is assessing the developments and evaluating potential strategies to secure its own rare earth supplies.
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