Rare earth trade ban: China’s curbs may disrupt India’s output, exports in 5 sectors, say SBI economists

China’s decision to ban exports of certain rare earth elements could disrupt India’s domestic production and exports in at least five core sectors, including transport equipment, basic metals, machinery, construction, and electronics, according to a new report from economists at the State Bank of India (SBI).

The report pegged India’s rare earth and compound imports at $31.9 million and magnet imports at $291 million for FY25. Notably, India’s rare earth magnet imports have surged this year amid rising consumption trends in downstream industries, PTI reported.

“China dominates in India's direction of trade in rare earth minerals and compounds,” the report said, flagging the need for India to boost domestic exploration and reduce import reliance.

According to SBI’s analysis, the ban’s fallout is likely to impact both domestic output and exports in the affected sectors. Financial institutions, including banks, may also face some indirect effects due to their exposure to affected industries, the report noted.

To counter the risk, SBI economists urged Indian states to take proactive steps to identify and tap rare earth reserves. They cited the Odisha government’s Rs 8,000-crore scheme to boost critical mineral exploration, including activities in the Ganjam district, as an example of targeted policy intervention.

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