Business

Global Tensions Rise as Chinese Rare Earth Export Curbs Threaten Indian Electronics Industry

Indian Electronics Firms Face Production Challenges Due to Rare Earth Shortages

A number of companies under India’s Electronics Component Manufacturing Scheme (ECMS) have expressed concerns over meeting their production targets due to ongoing shortages of rare earth minerals. At least 10 companies have raised the issue with the ministry of electronics and information technology (MeitY), warning of potential failures to meet incentive-linked thresholds if the shortage persists.

China's Export Restrictions Cause Global Supply Disruptions

The scarcity stems from China's export restrictions on seven rare earth elements and associated magnets, introduced from April 4 this year. China controls over 90% of global rare earth processing, leading to significant disruptions in electronics, automobiles, and clean energy technologies worldwide.

Rare earth supply risk

Industry Explores Alternatives Amidst Challenges

Companies are exploring alternatives such as sourcing from different suppliers or shifting to rare-earth-free technologies. However, the timing is challenging, especially for those scaling up manufacturing for exports. The ECMS, launched in May with a budget of Rs 22,919 crore, aims to build a domestic ecosystem for electronic components but faces hurdles due to the current supply shocks.

Government and Industry Respond to Crisis

In response to industry requests, MeitY will extend the ECMS application window beyond July 31. Despite the disruptions, industry leaders remain hopeful, suggesting that China cannot afford long-term export bans without damaging its own companies and international relations.