China Tightens Grip On Critical Minerals, Raising Alarm For India's Strategic Sectors: GTRI

(MENAFN- KNN India) New Delhi, Jul 4 (KNN) China's expanding restrictions on critical mineral exports represent a significant escalation in economic pressure targeting India's key industrial sectors, according to a new analysis by the Global Trade Research Initiative (GTRI).

The restrictions have systematically targeted materials essential to India's electronics, electric vehicle, and defence manufacturing capabilities.

The think tank characterised these measures as a strategic wake-up call for New Delhi, emphasising the urgent need for import substitution strategies to reduce dependency on Beijing.

Since mid-2023, China has imposed export controls on gallium and germanium, two critical minerals fundamental to India's high-tech industries.

These controls were subsequently expanded in late 2024 to include graphite, directly impacting India's clean energy and battery manufacturing sectors.

Beijing has justified these export restrictions by citing national security concerns, employing what GTRI describes as 'strategic ambiguity' while tightening control over supply chains crucial to India's industrial development.

The escalation continued into 2025, with Chinese battery manufacturer CATL reportedly directing Foxconn to withdraw all Chinese engineers from its manufacturing facility near Chennai in June, disrupting operational timelines during a critical period for India's electronics and electric vehicle supply chain expansion.

The economic implications have become increasingly pronounced in India's trade relationship with China. India's imports from China surged during the fiscal year 2025 while exports declined sharply, resulting in a trade deficit of USD 100 billion.

Chinese suppliers now control over 80 percent of India's market share in several strategic sectors, including laptops, solar panels, antibiotics, viscose yarn, and lithium-ion batteries.

GTRI Founder Ajay Srivastava emphasised the strategic vulnerability created by this import dependence, stating that India must implement comprehensive measures to reduce reliance on Chinese imports through reverse-engineering initiatives, domestic production incentives, and long-term investment in advanced manufacturing capabilities.

The research organisation has proposed a multi-phase approach to address these vulnerabilities. The strategy includes establishing sector-specific industrial laboratories to reverse-engineer commonly imported goods and develop standardised blueprints for domestic production.

These designs would then be distributed to Indian small and medium enterprises for specialised manufacturing and to larger firms for mass production.

Additionally, GTRI has recommended creating a 'Localize-100' monitoring system to track progress in domestically producing the top 100 low- and mid-technology imports currently sourced from China.

This systematic approach aims to combine public research and development capabilities with private sector manufacturing capacity to enable rapid substitution of high-volume imports.

The analysis reflects broader concerns about supply chain vulnerabilities in the context of intensifying geopolitical tensions and global trade realignments.

The systematic nature of China's export restrictions suggests a coordinated strategy to leverage economic dependencies for geopolitical influence, particularly as India seeks to expand its manufacturing capabilities in strategic sectors.

(KNN Bureau)

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