India dodges direct impact of China rare earth element curbs, but worries linger insidelooknews

Workers transport soil containing rare earth elements for export at a port in Lianyungang, Jiangsu province, China. File.
| Photo Credit: Reuters

Indian imports of rare earth elements (REEs) such as dysprosium, gadolinium, lutetium and samarium have been quite small, shielding domestic supply chains — at least for a few months — from major disruptions, trade data shows. As a part of the U.S.–China trade war, Beijing imposed export restrictions on seven “heavy” REEs, which cannot be exported out of China by refiners until and unless specific authorisation is obtained. 

The developments highlight Indian attempts to more robustly secure access to critical minerals in general, and REEs in particular. As the government tries to woo firms to move more of their supply chains for semiconductors and defence electronics to India, access to minerals and REEs used in their production has been a parallel focus.

So far, since many of these manufacturers are in relatively early stages of shifting production here, the quantities of REEs imported to India has been low. According to data shared by the Ministry of Mines earlier this month in Parliament (before China’s export curbs were reported), only 2,270 tonnes of REEs and compounds of REEs were brought into the country in 2023–24. 

As such, much of the possible supply shock from China’s curbs have been moved up the chain to countries like Japan, which have, faced in the past with such curbs, already worked to accumulate months’ worth of stockpiles in advance. As such, India-specific disruptions may not immediately transpire.

Critical minerals

REEs are one of thirty substances that the Union government has listed as critical minerals, whose production and imports have been made a priority under the National Critical Mineral Mission (NCMM) taken up by the Ministry of Mines. Even before China’s curbs, the government flagged over-reliance on Chinese suppliers as a problem that could have consequences in the future.

“Production and processing of many critical minerals are geographically concentrated, making global supply vulnerable to several risks,” the ministry said in a presentation in January. “China’s restrictions on certain critical minerals, the Russia–Ukraine War, and other issues highlight the fragility of critical mineral supply and the need for diversifying sources,” the Ministry said. These vulnerabilities were last felt when China similarly restricted exports last year of antimony.

Under the Mission, announced by Finance Minister Nirmala Sitharaman last year during the Union Budget presentation, the government will streamline permissions for exploratory activities, fund research, and conduct more auctions of mineral blocks.