India-China: Trade Opportunities In Fertilisers, Rare Earth Minerals, Electronics Manufacturing, & Foreign Direct Investment Amid 50% Tariff Duty

New Delhi: With Prime Minister Narendra Modi meeting Chinese President Xi Jinping on Sunday on the sidelines of the Shanghai Cooperation Organisation (SCO) summit in Tianjin, India may use this engagement to strengthen trade ties with China, even as it faces pressure from the United States over tariffs and its relationship with Russia, reports said.

India is exploring trade opportunities with China in fertilisers, rare earth minerals, electronics manufacturing, and foreign direct investment. This comes at a time when Washington has imposed an additional national security tariff of 25 per cent on Indian goods, taking the total duty to 50 per cent from August 27.

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One of the biggest concerns for India is fertiliser supplies. Earlier this month, Beijing lifted restrictions on the export of Di-Ammonium Phosphate (DAP) fertilisers, rare earth magnets, and tunnel boring machines after External Affairs Minister S. Jaishankar raised the issue with his Chinese counterpart Wang Yi. Shipments have already begun, giving temporary relief to Indian farmers and industries.

India depends on China for almost 95 per cent of its specialty fertiliser needs. Around 80 per cent of imports come directly from China, while another 20 per cent are sourced through intermediaries. The earlier suspension of supplies had pushed prices up by 40 per cent. With the demand season for crops like grapes and bananas beginning in September, fresh restrictions are likely to raise fertiliser costs further, directly affecting farmers.

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China’s curbs on fertiliser exports had already disrupted supplies during the Rabi season, while restrictions on rare earths created worries for the auto and electronics industries. Tunnel boring machine delays also slowed down infrastructure projects. Rare earth minerals remain another sensitive area in talks. These minerals are vital for making magnets used in batteries, motors, and advanced electronics.

Chinese restrictions earlier this year had caused bottlenecks, threatening production lines in India. So far, there has been no significant progress in easing these export rules. As India balances its ties between Washington and Beijing, the latest talks may prove crucial in ensuring the smooth supply of key industrial inputs.

However, much will depend on how China handles export curbs in the coming months. In the past few months, India and China have taken several steps to improve their relations, which had been badly strained after the deadly Galwan Valley clashes between their troops in June 2020.

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