Highlights

• China has not fulfilled a reported promise to ease rare earth export restrictions to India, causing significant industrial disruption.
• India's manufacturing sectors, including EV and defense, remain critically dependent on Chinese rare earth supplies.
• Beijing views rare earth minerals as strategic geopolitical leverage.
• China is exploring alternative supply routes through Myanmar.

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A month has passed since Indian media reported that Chinese foreign minister Wang Yi personally assured External Affairs Minister S. Jaishankar that Beijing would ease restrictions on rare earth exports to India. Yet no shipments have arrived, and Beijing has never publicly acknowledged making such a pledge. The episode highlights how China’s dominance in rare earths remains both a lever of power and a source of friction in Asia’s supply chains.

The Pledge That Wasn’t

On August 18, Indian outlets cited government sources claiming that Wang Yi promised to lift curbs on rare earths, fertilizers, and tunnel boring machines. Headlines suggested relief was imminent. But within hours, China’s semi-official Global Times denied such a move, and the foreign ministry in Beijing gave only a vague statement about “cooperation” and “supply chain stability.” Since then, Indian importers have received no clarity — or magnets.

Why It Matters

India’s EV makers, electronics manufacturers, and defense firms depend heavily on Chinese supplies. Rare earth magnets, especially neodymium-based, convert battery power into motion and are central to cars, wind turbines, and military systems. When exports stalled earlier this year, Ford was forced to idle SUV production in the U.S., underscoring how global disruptions ripple quickly. For India, which consumes far less but aspires to grow its EV sector, the absence of imports exposes industrial vulnerability.

Beijing’s Calculus

Analysts point out that China’s hesitation is not necessarily targeted at India. Export restrictions announced in April covered seven rare earths and certain magnets, part of Beijing’s response to U.S. tariff hikes. A quota system has since snarled flows worldwide. Still, China’s bureaucracy has been slow to process Indian applications, and Beijing knows that India holds its own reserves — estimated at 6.9 million tonnes — and is even exploring mining partnerships in Myanmar.

The broader context is geopolitical. Earlier this year, Beijing used rare earths as leverage with Washington, contributing to a temporary tariff truce. The lesson is clear: China views these “industrial vitamins” as bargaining chips, not mere commodities.

Turning to Myanmar

With Chinese supplies in limbo, New Delhi is exploring its options. India’s Ministry of Mines (opens in a new tab) has instructed state-owned and private companies to investigate mining and transportation projects in Myanmar, a country whose ore has become a major feedstock for Chinese processors. In 2024, over half of China’s rare earth imports — 44,000 of 77,300 tons — came from Myanmar. If India succeeds in building direct access, it could reduce dependence on Beijing and carve out a role in regional supply chains. But the hurdles are significant: political instability in Myanmar, limited infrastructure, and India’s lack of refining capacity mean any gains will take time to materialize.

India’s Strategic Crossroads

For now, the promised shipments from China remain elusive, leaving Indian manufacturers to wait and worry. The episode underscores a hard truth: reserves alone do not equal independence. Without investment in domestic refining and magnet production, India will remain hostage to Beijing’s policy swings, even as it looks to neighbors for relief.

As one Chinese academic put it: “If India seeks to improve relations with China, China welcomes it. However, China will not make major concessions even if that displeases the Indian government.” In rare earths, goodwill remains as rare as the minerals themselves.

Source: “Nearly a month after Wang Yi’s assurance, no sign of end to China drought of rare earths to India,” Modern Diplomacy, September 20, 2025

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