CHINA'S RARE EARTH THREAT

India's automotive sector braces for production cuts, as China stalls exports of rare earth magnets

- By M.G. ARUN

THE US-CHINA TARIFF WAR may have ostensibly eased into a softer phase of negotiations, but one stealth missile fired by China in its early days has only hit home now. The potential fallout is global, and India is very much within range. On April 4, two days after President Donald Trump's tariff blitz, Beijing had hit back by calling halt to its export of rare earth magnets. China controls over 90 per cent of the global processing capacity for this key component, used in everything from automobiles and fighter jets to robotics and home appliances. As it leverages this monopoly by slow-rolling licences, stockpiles everywhere are falling as rapidly as alarm is rising.

India imported 870 tonnes of these magnets worth over Rs 300 crore in FY25, mostly from China, as domestic production capacity remains negligible. Now, though, Chinese exporters must themselves obtain government licences, furnishing detailed end-use certificates from Indian buyers, before shipping. The certificates need to be signed by India's foreign ministry and the Chinese embassy, apparently to ensure the end-use is not military. This knot has held up clearances and shipments. Industry sources say over 30 applications approved in India are already pending final clearance in China.