India’s booming solar, electric vehicle (EV), and electronics industries face significant disruptions as China imposes export restrictions on critical raw materials and machinery. This development, linked to geopolitical tensions and retaliatory trade policies, underscores the vulnerabilities in India’s supply chains and its heavy reliance on Chinese imports.
China has introduced export controls on gallium, germanium, and antimony—materials essential for solar cells, semiconductors, and defence technologies. Additionally, it plans to restrict lithium extraction and battery cathode technologies, critical for EV battery manufacturing. These measures are not only aimed at the US but also significantly impact other nations, including India, which relies on Chinese inputs for various sectors.
China’s actions reflect its strategy to retaliate against US sanctions and maintain dominance in global supply chains.
India imports significant volumes of Chinese machinery and components to sustain its electronics manufacturing industry. Export restrictions could result in production delays, increased costs, and supply shortages.
India’s ambitious solar energy targets face hurdles as gallium and germanium are critical for solar panel manufacturing. Dependence on Chinese inputs exposes the sector to vulnerabilities, threatening project timelines.
The EV sector, poised for exponential growth, is particularly vulnerable. Lithium and battery technology controls disrupt the production of EV batteries, a cornerstone of India’s green energy ambitions.
The restrictions highlight escalating geopolitical tensions, with China responding to:
China’s retaliation demonstrates its critical role in global supply chains, despite ongoing efforts by nations like the US to reduce dependency.
To mitigate the impact of China’s curbs, India needs to adopt a multifaceted approach:
Boosting domestic production capabilities can reduce reliance on imports. Government initiatives such as Make in India should be leveraged to build robust manufacturing ecosystems.
Engaging with countries like Japan and South Korea can provide access to high-quality components and alternative sources of critical materials. These partnerships can help India create more resilient and diversified supply chains.
Developing indigenous technologies for solar panels, semiconductors, and EV batteries can reduce dependency on foreign suppliers.
China’s actions ripple through global trade networks. Countries like Mexico, Vietnam, and ASEAN, which process Chinese inputs for export, are equally affected. Despite efforts to curb reliance on Chinese goods, its dominance in raw materials and intermediate goods reinforces its pivotal role in global supply chains.
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Published on: Jan 17, 2025, 4:23 PM IST
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