“Even India has an opportunity,” Chandak stated, suggesting that existing government departments could expedite efforts in material processing.
The restrictions, which reportedly took effect earlier this month, target materials like rare earth magnets crucial for electric vehicle motors and various electronics. This move is seen as part of the broader trade tensions between China and the US. China dominates the global market, particularly in the processing of these minerals, which, while found worldwide, require specialised refining techniques.Jonathan Cheng, China Bureau Chief at The Wall Street Journal, noted that China recognises its “chokehold on the global industry” and is using this leverage, framing it within national security concerns, much like the US has done with semiconductor restrictions.
Industries reliant on these materials are already feeling the pinch. Rakesh Sharma, Executive Director of Bajaj Auto, confirmed significant supply chain disruptions for the EV sector.”The controls came into immediate effect… so much so that products which were at the ports for shipment were also held back,” Sharma explained.
Adding to the disruption is the complex and currently ambiguous certification process demanded by China. According to Sharma, exporters now need end-use certificates endorsed by multiple authorities, including the Indian foreign ministry and the Chinese Embassy, declaring the materials won’t be diverted.
Sharma described the process as “a little ambiguous,” with uncertainty surrounding specific steps, certifying agencies, timelines, and whether approvals are needed per transaction or for bulk quantities.
While the immediate impact on the electronics and semiconductor sector might be less severe in the very short term due to existing inventory, Chandak acknowledged it’s an issue that “will need to be sorted out and needs to be addressed.” He believes that while disruptions will occur globally, alternatives will emerge.
Looking ahead, industries are expected to adapt. Chandak emphasised that companies were already working on diversifying their supply chains even before these latest restrictions, exploring mining resources in countries like Australia, Africa, and India itself, alongside developing recycling methods. The long-term trend points towards reduced reliance on single sources and the development of alternative supply routes and technologies, he added.
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