Bad news for US, Europe, Japan as China takes THIS decision, here's how it will affect India

China’s tight grip over Rare Earth Minerals (REEs) has sparked concerns across the world. The fresh restrictions came in effect on April 4 at a time when China was engaged in trade dispute with the United States following the implementation of reciprocal tariffs by President Donald Trump-led administration. 

As per a report by Economic Times, these restrictions require special export licences to access materials crucial to electric motors, smartphones, and defence equipment. 

According to the International Energy Agency and the US Geological Survey, China produces 60 per cent of the world’s rare earths and controls 90 per cent of global refining, which grants Beijing significant control over global supply chains. 

Why is it problematic? 

President Xi-Jinping-led Chinese government's grip over Rare Earth Minerals is seen as jolt to global supply chains as key elements like samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium constitute a vital part of electric vehicles, brakes, smartphones, defence systems and more. 

The curbs have caused delays or even stoppages in production worldwide. Meanwhile, representatives from India, Japan and Europe have initiated diplomatic efforts to reach out to their Chinese counterpart to expedite stalled export licenses. 

How does it affect India? 

Being the world’s third-largest car market, India faces a massive risk. Local carmakers like Maruti Suzuki and Bajaj Auto have stated that their supply chains were severely affected. Pertinent to note that many of their electric models depend on magnets from China. 

Amidst the curb, industry groups such as the Society of Indian Automobile Manufacturers (SIAM) and the Automotive Component Manufacturers Association (ACMA) are gearing up to send a delegation to China to resolve the issue. 

Meanwhile, the Ministry of Heavy Industries is in talks with the stakeholders, aiming to develop a home-grown rare earth magnet industries. 

The heat reaches US

Countries like the United States which claim to be a ‘superpower’ is facing the heat after China’s hold over REEs. The United States is heavily dependent on China for 61 per cent of its rare earth imports. With the fresh curbs, automobile giants like Tesla and General Motors have warned that the delays could stop production.