Worrying: India's reliance on China for rare earth machinery growing
What's the story
India's dependence on China for rare earth and mining-related machinery has increased significantly over the last seven years. An analysis by Moneycontrol revealed that imports from China have more than quadrupled during this period. Specialized equipment like agitators, furnaces, electrolysers, and separation systems used in rare earth refining and production saw a sharp rise in imports from $263 million in FY18 to $1.1 billion in FY25.
Trends
China's dominance in machinery imports
China's share in India's total imports of such machinery has also increased significantly, from 24.6% in FY18 to a whopping 44.6% in FY25. The data highlights China's dominance in this sector and the growing dependence of India on its northern neighbor for these critical machines. The trend is not just limited to raw materials but also extends to the equipment needed for processing them, making it even more difficult for India to create its own rare earth value chain.
Strategic challenge
Strategic challenges for India
China now accounts for almost half of India's imports of machines used in refining, separation, and magnet-making. These technologies are critical for clean energy, electric mobility, as well as defense manufacturing.
Import increase
Specialized machinery imports surge
Among specific product categories, imports of specialized machinery like sedimentation and crystallization agitators, magnetron sputtering and coating systems, and winding and laminating machines for rare earth magnet production have risen five-fold. The figures jumped from $159 million in FY18 to a staggering $864 million in FY25. This sharp rise further underscores India's growing reliance on China for these critical tools.
Equipment imports
Industrial mixers and electrolyser imports double
Imports of industrial mixers and mixing paddles have also doubled to $170 million. Electrolysers used in metal extraction have seen a three-fold increase, with China becoming India's largest supplier in this segment. China's share in India's electrolyser imports rose from 24% in FY19 to an impressive 44% by FY25, overtaking Japan and Germany.
Export dynamics
A gradual shift in furnace imports
Despite being the top exporter of furnaces to India, China's share has decreased over the last three years. It now stands at 38.2%, down from a whopping 56% between FY18 and FY20. The decline indicates a gradual diversification in this category.
Export restrictions
China's export controls on rare earths raise concerns for India
In October, China's Ministry of Commerce and General Administration of Customs announced new export controls on rare earth-related items. The restrictions were announced via notifications 57, 58, and 61, tightening global access to refining technologies and equipment. As India aims to ramp up domestic exploration and processing of critical minerals, these restrictions could make it much harder for the country to achieve self-reliance in critical minerals.