The 17 rare earth elements that are at the centre of the current crisis are critical components of everyday products -- from cars to jet engines to electronics like smartphones and flat-screen TVs.
When Beijing announced in April that it would tighten its grip on exports of rare earth-related items, the reverberations were swift -- and worldwide.
The move, enforced by China's ministry of commerce and the general administration of customs, has sent tremors through global automobile industry, including India's electric vehicle (EV) sector.
At the G7 Summit that opened on June 15, 2025 in Canada, rare earth supplies were high on the agenda.
Canadian Prime Minister Mark Carney, laying out the priorities for his country's G7 presidency, spoke of 'fortifying critical mineral supply chains' as one of three core missions to shore up economic resilience.
India's own diplomatic channels have already been activated. On June 12, Foreign Secretary Vikram Misri met Chinese Vice-Foreign Minister Sun Weidong in New Delhi and raised the issue of exports curbs on rare earth minerals and magnets.
In a statement the following day, the ministry of external affairs said the two sides agreed to hold a series of 'functional dialogues' on economic and trade matters that would encompass discussions on Beijing's restrictions on the export of such materials.
Behind closed doors, New Delhi has made clear its expectation: Predictability and stability in supply chains, in line with international trade norms.
Official sources confirmed ongoing efforts towards early resolution of the issue.
On June 5, Indian Ambassador to China Pradeep Kumar Rawat also met with Sun in Beijing, with both sides exchanging views on 'issues of common interest and concern', according to a readout by Beijing.
However, China has remained taciturn. The Chinese readout of the Misri-Sun meeting noted, opaquely, that both countries had agreed to 'resume bilateral dialogue mechanisms steadily'.
Over 40 applications from Indian firms remain pending with Chinese authorities after Beijing introduced a new end-user certificate for rare earth elements and magnets in April, seen as a retaliatory measure amid the ongoing US-China trade war.
Without resolution, the Indian auto industry faces an impending supply crisis.
Already, auto manufacturers and industry groups have begun to sound the alarm.
Original equipment manufacturers like Bajaj Auto and Maruti Suzuki, along with associations such as the Society of Indian Automobile Manufacturers and the Automotive Components Manufacturers Association, have raised concerns about a looming shortage of neodymium-iron-boron (NdFeB) magnets, essential components for high-performance electric motors.
If fresh supply does not resume soon, production lines may begin grinding to a halt as early as July.
The 17 rare earth elements that are at the centre of the current crisis are critical components of everyday products -- from cars to jet engines to electronics like smartphones and flat-screen TVs.
Their role extends further to wind turbines, MRI machines, and even cancer treatment.
And they are overwhelmingly sourced from a single country: China, which controls more than 90 per cent of global production of earth magnets.
In FY25, India imported approximately $200 million worth of rare earth magnets for both automotive and non-automotive applications, 85 per cent of which came from China, noted Jitin Makkar, senior vice-president and group head at Icra, underlining the gravity of the crisis.
Demand is expected to surge as India accelerates its push toward electrification.
Icra estimates that India's consumption of rare earth magnets could jump nearly ninefold -- from 1,700 tonnes today to 15,400 tonnes by 2032.
The magnets used in electric two-wheelers alone -- costing between Rs 8,000 and Rs 15,000 per vehicle -- account for nearly 30 per cent of the total motor unit cost.
This is not China's first muscle-flexing on rare earth minerals.
In the early 2010s, Beijing wielded its rare earth near monopoly as a strategic lever: A diplomatic standoff with Japan following the 2010 Senkaku boat collision led to an unofficial Chinese export ban on rare earths to Japan.
Export quotas followed, disrupting global supply chains and forcing the US, the European Union, and Japan to bring a case before the WTO.
The WTO ruled against China, forcing it to scrap its quotas, but not before the world was reminded of how leverage in global trade can be extracted not just from oil or semiconductors, but also from obscure minerals buried in the Earth.
India, too, sits atop considerable rare earth reserves, though they remain underexplored. One mineral in particular -- monazite -- offers a potential domestic alternative.
Found in the beach sands stretching from Odisha to Kerala, monazite contains valuable rare earth elements.
"These sands contain deposits of several other minerals -- ilmenite and rutile, which are primary feedstocks for titanium. Currently, IREL (Indian Rare Earths Limited) is the sole extractor and processor, as private players are not permitted to mine and process monazite," said Ram Kollareddy, chief executive officer, Midwest Ltd.
His firm is expected to come out with the first rare earth magnets by December from its 500-tonne-per-annum facility in Hyderabad.
Once magnet production is established domestically, he said, India is expected to gradually meet nearly 80 per cent of the demand for its EV motors, MRIs, wind turbines, and defence requirements.
But the ghosts of 2010 linger. Back then, China's rare earth dominance ignited a geopolitical backlash and drove calls for alternative supply chains.
Today, those calls have grown louder -- but the dependency remains. Beijing knows it. And so does the rest of the world.
Asked whether China would offer India the same trade relaxation on rare earth exports recently extended to the US and the EU, Chinese Foreign Ministry spokesperson Lin Jian responded with ambiguity: 'We are willing to enhance dialogue and cooperation with relevant countries and regions to jointly keep the stability of global industrial and supply chains.'
India may need to dig deep, both literally and diplomatically.
Feature Presentation: Aslam Hunani/Rediff
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