China's Rare Earth Export Ban: A Challenge for India

China's recent decision to halt exports of certain rare earth elements poses a significant threat to India's domestic production and exports across five critical sectors: transport equipment, basic metals, machinery, construction, and electronics, as highlighted by a new report from the State Bank of India (SBI) economists.

India's Import Dependency and the Urgent Need for Action

The report reveals India's rare earth and compound imports at $31.9 million and magnet imports at $291 million for FY25, with a notable surge in rare earth magnet imports this year. "China dominates in India's direction of trade in rare earth minerals and compounds," the report states, emphasizing the urgent need for India to enhance domestic exploration and reduce reliance on imports.

Potential Impacts and Proactive Measures

The ban's repercussions are expected to affect not only domestic output and exports in the mentioned sectors but also financial institutions due to their exposure to these industries. In response, SBI economists are calling for proactive steps from Indian states to identify and utilize rare earth reserves, citing Odisha's Rs 8,000-crore initiative for critical mineral exploration as a model for policy intervention.