2 days ago
Rare earth rattles: As US woos China, India watches and weighs its chances
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As the 90-day deadline for US-China trade negotiations nears, global anxieties over rare earth supply chains are intensifying. While official statements from Washington suggest a willingness to ease tech export restrictions in return for freer Chinese rare earth shipments, The world remains sceptical about any swift breakthroughs — especially as domestic tensions and international brinkmanship take centre stage.'The London meetings may not clinch it, but you have to see that there was a 90-day pause on April 2nd. That deadline is not very far off and no big deals have been clinched by Mr Trump except with Britain,' says Swaminathan Aiyar, Consulting Editor at ET Now. 'So, right now they [the US] are getting a little uneasy and willing to give way. Because of that, in the USA, there is this new thing called 'TACO' — Trump Always Chickens Out.'In April, China, the world's dominant exporter of rare earth magnets, imposed export restrictions on seven rare earth elements and finished magnets, mandating export licences."We have begun, but it will take a long time and frankly we do not have very good domestic prospects. It will be more like trying to diversify our sources from other places. But the fact is that right now our auto industries and smartphone industries are both complaining that the supply chain is becoming very strained," said Aiyar."India has made it very clear that Sino-Indian relations must not be mixed up with Sino-US relations. So, I mean that is one good thing. China is keeping a very large number of countries on a tight leash to prove how strong position it is in and it knows very well that while all the other countries want to get other sources of supply, it is going to take some time and therefore China is going to have the upper hand in this deal not just in what happens in the next month or so but even in the next year, in the next two years," said Aiyar."So, this is going to be an interesting Chinese lever that it may use again and again," added Aiyar.A disruption in rare earth magnet supplies lasting beyond a month can impact production of passenger vehicles, including electric models, weighing on the domestic automobile industry 's growth momentum, a Crisil ratings report on Tuesday said."The supply squeeze comes just as the auto sector is preparing for aggressive EV rollouts. Over a dozen new electric models are planned for launch, most built on PMSM platforms," Crisil Ratings Senior Director Anuj Sethi said. While most automakers currently have 4-6 weeks of inventory, prolonged delays could start affecting vehicle production, with EV models facing deferrals or rescheduling from July 2025, he added. A broader impact on two-wheelers and ICE PVs may follow if the supply bottlenecks persist for an extended period, Sethi Union minister Piyush Goyal said India is actively working to develop alternative sources and position itself as a reliable partner for global businesses looking to reduce dependence on Chinese further acknowledged that China's restrictions on rare earth exports will create short-term challenges, especially for India's automotive and white goods sectors. However, he expressed confidence that joint efforts by the government, industry, and innovators can turn these challenges into long-term the same time, the government is ramping up support for Indian Rare Earths Limited, providing the necessary resources to increase domestic production. At the recently held India-Central Asia Dialogue in New Delhi, India and five Central Asian nations expressed mutual interest in jointly exploring rare earths and other critical minerals. In a joint statement, they called for an early meeting of the India-Central Asia Rare Earth Forum, signalling growing geopolitical urgency to diversify away from China's the rare earth puzzle deepens and trade talks meander, India may not be at the table right now — but it's certainly watching the game, preparing its own play.
