India, China discuss rare earth curbs amid auto industry concerns

By Sudhi Ranjan Sen and Alisha Sachdev
Indian officials discussed China's rare earth restrictions during talks with that country's vice foreign minister this week, people familiar with the matter said, as automakers continue to warn of a looming shortage that may disrupt output in the South Asian nation.
The issue was raised during a meeting on Thursday between Foreign Secretary Vikram Misri and China's Vice Foreign Minister Sun Weidong in New Delhi, the people said, asking not to be identified because the discussions were private. The two sides agreed to hold further talks about critical mineral supplies and broader economic and trade issues, they said.
China's export curbs on rare earth magnets — used in everything from smartphones to electric vehicles — are causing delays in shipments of auto parts to India, worrying carmakers about major disruptions to production. There are some signs that Indian automakers may be facing tougher conditions than their counterparts in other countries in securing the supplies from China, with Beijing rejecting some applications for India-bound shipments.
In a readout of the meeting between Misri and Sun, India's Ministry of External Affairs didn't specifically refer to the discussion about rare earths, although it hinted at ongoing talks.
'The two sides agreed to hold certain functional dialog including in the economic and trade areas to discuss and resolve specific issues of concern,' the ministry said on Friday, without providing details of any future meetings.
China's Ministry of Foreign Affairs said in a statement that Sun and Misri 'held a candid and in-depth exchange of views on bilateral exchanges and cooperation as well as international and regional issues of mutual interest.'
Indian carmakers have been lobbying the government to push China to ease restrictions on rare earth magnets. They're also planning to visit Beijing this month to make their case to officials and suppliers there, people familiar with the matter said. A proposed delegation of about 20 members from auto and component firms is awaiting support from the Chinese embassy to secure appointments in Beijing, they said.
The fact that India has now raised the rare earth issue with China in a diplomatic forum signals to automakers that a resolution may be in sight. Recent trade talks between the US and China have also increased optimism that restrictions may be eased.
The two-day visit by Sun follows Misri's trip to Beijing in January, and comes as both countries take steps to rebuild ties following the end of a four-year border stalemate. President Xi Jinping and Prime Minister Narendra Modi pledged in October last year to stabilize relations. Global uncertainty triggered by US President Donald Trump's upheaval of trade have also added to the urgency for the Asian neighbors to normalize ties.
After the deadly border clashes in 2020, India increased legal scrutiny to discourage Chinese investments, banned thousands of mobile phone applications and curbed visas.
The two sides agreed during the talks this week to speed up the process to restart direct flights and take 'practical' steps to facilitate visas, the MEA said in its statement Friday.
Officials 'agreed to continue to stabilize and rebuild ties with priority on people-centric engagements,' the MEA said.

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The Print

35 minutes ago

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Indian Express

an hour ago

• Indian Express

Iranian parliament recommends Strait of Hormuz closure: What may be in store for energy markets, India's oil imports

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The US Energy Information Administration (EIA) calls it the 'world's most important oil transit chokepoint', with around one-fifth of global liquid petroleum fuel consumption and global liquefied natural gas (LNG) trade transiting the strait. Much of India's oil from key West Asian suppliers like Iraq, Saudi Arabia, and the UAE reaches Indian ports via the Strait of Hormuz. A bulk of India's LNG imports, which come predominantly from Qatar, also come through this vital choke point. India is the world's third-largest consumer of crude oil and depends on imports to meet over 85 per cent of its requirement. The country is also among the top importers of LNG, depending on imports to meet around half of its natural gas demand. India's largest source of crude oil is Russia, followed by West Asian suppliers Iraq, Saudi Arabia, and the UAE. India also buys oil from other countries in the region like Kuwait, Qatar, and Oman. Indian refiners do not purchase Iranian crude as Iran's energy sector is under US sanctions. According to tanker data analysed by The Indian Express, nearly 47 per cent of crude oil imported by Indian refiners in May was likely to have been transported via the Strait of Hormuz. The importance of the chokepoint for India's energy supply and security cannot be understated. To be sure, Tehran has over the years made such threats at various points, but has never actually closed the strait even when it fought its worst wars. That is also because given the importance of the channel for global energy trade, any such attempt could draw a strong response from regional powers and even the US. Also, given that Iran itself depends on the Strait of Hormuz for its trade, particularly oil exports to China, any blockade could impact Tehran considerably, experts pointed out. 'First and foremost, such a blockade would disproportionately harm China, which sources 47% of its seaborne crude from the Middle East Gulf, including Iranian volumes. Iran's ability to maintain its sole major oil customer would be directly jeopardised. Additionally, Tehran has made deliberate efforts over the past two years to rebuild ties with key regional actors, including Saudi Arabia and the UAE, both of which rely heavily on the Strait for exports and have publicly condemned Israel's actions. Sabotaging their flows would risk unraveling those diplomatic gains,' commodity market analytics firm Kpler said in a note on June 19. '…while the rhetoric may generate headlines, the fundamentals argue strongly against action,' the Kpler note said. 'It's really hard to tell, but I would say it's very unlikely for that (blockade of the Strait of Hormuz) to happen. And we've seen in the past, whenever there were indications or even threats that Iran might be doing this, you would hear statements from the US Fifth Fleet that they would immediately intervene and they would unblock the strait. Of course, it's something that we need to flag as a risk,' Kpler's head of Middle East energy & OPEC+ insights had said in a webinar last week. Hormuz closure will hurt energy import-dependent India Given the fact that the Iranian parliament has recommended the closure of the Strait of Hormuz, the possibility cannot be dismissed. In fact, given that the regime in Tehran is perhaps fighting for survival, Iran might just attempt something that it has only threatened in the past. If the critical water channel indeed is closed by Iran, Bakr said oil prices, which have been rather subdued for a few months now, could jump to over $120 per barrel, or even touch $150. Apart from supply disruption for India, the surge in international energy prices due to any such blockade would hit India due to its heavy reliance on imported oil. This makes India's economy vulnerable to global oil price fluctuations. It also has a bearing on the country's trade deficit, foreign exchange reserves, the rupee's exchange rate, and inflation rate, among others. Major oil producers like Saudi Arabia and the UAE have some alternative infrastructure in the form of pipelines to bypass the Strait of Hormuz for oil exports, but to what extent that would help would depend on the extent of the disruption to exports via the strait. According to officials in India's refining sector, the prospect of elevated freight rates due to high risk premium for tankers passing through the strait would lead to higher landed price of oil and gas for them, but that would still be significantly better than runaway oil prices due to any major supply disruption, which would be nearly certain if the Strait of Hormuz is shut for oil tankers. Threat to West Asian oil exports: Price impact So far, Iranian oil export infrastructure doesn't appear to have been majorly hit by Israel, which is a relief for the energy markets and countries like India, even though they do not buy oil from Iran. This is because some Chinese refiners buy bulk Iranian oil and if Iran's oil exports are majorly impaired due to the conflict, these buyers will be forced to scout for oil from other sources, which could lead to higher oil prices. 'If Iranian crude exports are disrupted, Chinese refiners, the sole buyers of Iranian barrels—would need to seek alternative grades from other Middle Eastern countries and Russian crudes. This could also boost freight rates and tanker insurance premiums… and hurt refinery margins, particularly in Asia,' Richard Joswick, head of near-term oil analysis at S&P Global Commodity Insights, said in a note recently. While oil producers' cartel OPEC has significant spare production capacity that they can use in case of a major outage of Iranian oil exports, it is important to note that much of that is with other West Asian oil producers, which are located in the broader Israel-Iran conflict zone. According to industry watchers, this spare capacity will only be helpful if other oil producers in the region are able to export to the rest of the world effectively. And that would have two key prerequisites—their own oil production and export infrastructure remains unharmed and the Strait of Hormuz remains open and safe for energy trade. Sukalp Sharma is a Senior Assistant Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 13 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More

Business Standard

an hour ago

• Business Standard

Another flight from Iran with 311 Indians lands in Delhi; 1,400 evacuated

India launched Operation Sindhu last week to bring back Indians from Iran and Israel in view of increasing hostilities between the two nations Press Trust of India New Delhi India on Sunday evacuated more than 300 Indian nationals from Iran amid the escalating tensions between the Persian Gulf nation and Israel following the US bombing of three Iranian nuclear sites. The Ministry of External Affairs (MEA) said 311 Indians landed in Delhi on a special flight from the Iranian city of Mashhad. With the fresh batch of evacuees, the total number of those brought back from Iran now stands at 1,428. Three-hundred eleven Indian nationals arrived in New Delhi on a special flight from Mashhad at 1630 hours on June 22, External Affairs Ministry spokesperson Randhir Jaiswal said. He said a total of 1,428 Indian nationals have been evacuated from Iran so far. India launched Operation Sindhu last week to bring back Indians from Iran and Israel in view of increasing hostilities between the two nations. Israel and Iran have fired hundreds of missiles and drones at each other's cities and military and strategic facilities since the hostilities began over a week back. The tensions escalated significantly following the US bombing of three major Iranian nuclear sites on Sunday morning. India has evacuated its nationals on chartered flights operated from the Iranian city of Mashhad, the Armenian capital of Yerevan and the Turkmenistan capital of Ashgabat since Wednesday. Iran lifted airspace restrictions on Friday to facilitate three chartered flights from Mashhad. The first flight landed in New Delhi late on Friday with 290 Indians, and the second one landed in the national capital on Saturday afternoon with 310 Indians. Another flight arrived from the Armenian capital city of Yerevan on Thursday. A special evacuation flight from Ashgabat landed in New Delhi early on Saturday morning.