Resumption of Rare Earth Magnet Supplies from China to India
China has resumed the supply of heavy rare earth magnets to India after a six-month hiatus, specifically benefitting sectors such as electric vehicles, renewable energy, and consumer electronics. However, these supplies come with specific conditions.
Conditions Imposed by China
- Magnets cannot be re-exported to the US.
- They must not be used for military purposes.
Context of Trade Relations
Amidst an ongoing trade war between China and the US, certain steps have been agreed upon to ease tensions following a meeting between US President Donald Trump and Chinese President Xi Jinping.
Approval for Indian Companies
- Four Indian companies - Hitachi, Continental, Jay-Ushin, and DE Diamonds - have received approval from local Chinese authorities for the supply of these magnets.
- These companies had submitted end-user certificates (EUC) ensuring non-military use.
- Over 50 applications for import were pending with China's Ministry of Commerce.
Strategic Importance of Rare Earth Magnets
- Essential for high-tech industries, including EV manufacturing, renewable energy, electronics, aerospace, and defense sectors in India.
- China controls 90% of global rare earth magnet production.
Recent Developments
- Resumption of direct flights between India and China, connecting Kolkata and Guangzhou.
- Confirmation of licenses for Indian companies by the Ministry of External Affairs, highlighting potential impacts from US-China talks.
Global Trade Dynamics
China had imposed export controls on rare earth items in April with an emphasis on national security, necessitating licenses and guarantees of non-military use from buyers. While supplies to Europe and Southeast Asia resumed, India faced delays in obtaining export licenses.
India's Import Statistics
In FY25, India imported 870 tonnes of rare earth magnets valued at ₹306 crore.