Rare earth turns even rarer as China sets new rule; world stares at the unknown, India fumbles for options

Core Viewpoint - China has expanded its export curbs on rare earth metals and related technologies, requiring official licensing for exporters and restricting overseas cooperation, which significantly impacts industries in India [1][20]. Export Restrictions - New rules mandate that exporters need official licensing to ship technologies and equipment related to rare earth mining, smelting, and magnet manufacture [1][20]. - Chinese firms and foreign partners must seek approval for rare earth-related projects abroad, with India required to provide assurances that heavy rare earth magnets supplied to it will not be diverted for military use [2][5][20]. Impact on Indian Industries - Indian electric vehicle (EV) manufacturers are facing delays and shortages of rare earth magnets due to China's export curbs, leading to consultations for alternative sources [11][12]. - Over 50 import applications for heavy rare earth magnets from Indian automakers have been stuck in Chinese regulatory limbo since April [12]. - The electronics industry in India is experiencing production delays due to shortages of magnets and components [12]. Economic Ripple Effects - An analysis by the State Bank of India indicates that the curbs could affect various sectors, including transport equipment, machinery, and basic metals, potentially leading to slower production cycles and financial stress in the banking sector [13][14]. India's Response Strategies - India is actively seeking rare earth supplies from non-Chinese sources and has signed agreements with countries like Australia, Argentina, and Zambia to secure critical mineral supply [15][20]. - Efforts are underway to develop magnet-free and alternative motor technologies, with some firms fast-tracking tests on EV motors that do not use rare earth magnets [16][20]. - The Indian government is engaging with China through commercial and diplomatic channels to ensure more predictable exports and consistent practices [17][20]. Long-term Vulnerability - Despite recent easing of curbs, analysts warn that India's dependence on China for rare earths remains a structural risk, necessitating stronger domestic capabilities and partnerships with non-Chinese sources [18][19][20].