Rare Earths, Festive Threat?

DECODE THE NEWS

China’s Export Curbs Squeeze Dealership Stock Before Festive Surge

What?

India’s dealerships are bracing for a festive season that no one knows how to prepare for. With China tightening rare earth exports—especially of neodymium and dysprosium used in electric vehicle (EV) motors and even regular Internal Combustion Engine (ICE) car components—automakers are beginning to warn dealers about slower deliveries.

Two-wheeler dealers have just a month of stock left, and four-wheeler inventory could be wiped out in 8–12 weeks if supply remains choked. Between August and October, when 40% of annual auto sales take place, this shortage could hit both deliveries and earnings hard.

Why?

China controls more than 90% of global rare earth magnet production and supplies 100% of India’s imports in key categories. In FY24, India imported 699 tonnes of rare earth metals and 460 tonnes of permanent magnets—mostly from China. New Chinese rules now require “end-user certificates” from both the supplier and the Indian government, delaying shipments and creating panic.

Automotive parts suppliers are already squeezed, and even non-EV vehicles like Sport Utility Vehicles (SUVs) and hybrids that rely on power steering magnets could be affected. Analysts say Original Equipment Manufacturer (OEMs) may prioritise ICE models, but pure EV makers are far more exposed.

Does It Change My Life?

Yes — especially if you're planning to buy a new EV or compact SUV this festive season. Models could be delayed or unavailable altogether. Prices may also climb if supplies remain squeezed. Experts say long-term fixes — like sourcing from Vietnam or recycling rare earths domestically—are still in their infancy. For now, the industry is flying blind.

One solution? Companies like MiniMines are trying to recycle these critical minerals from e-waste. But until that scales up, festive car buying could feel a lot like a game of inventory roulette.

AIR INDIA PLANE CRASH

Air India Crash: Tata Chairman Urges Focus

The Lead: Tata Sons Chairman N Chandrasekaran called the June 12 crash of Air India flight AI171 in Ahmedabad the most heartbreaking experience of his career. In a message to employees on Monday, he urged the Air India team to remain focused and resilient amid the tragedy.

Flashpoint: The London-bound Boeing 787 Dreamliner crashed just minutes after takeoff from Ahmedabad, killing 241 of the 242 people on board, along with several others on the ground. The only survivor—a British national—is currently undergoing treatment.

What’s Next? India’s Aircraft Accident Investigation Bureau (AAIB) is leading the crash inquiry with support from US agencies. The National Transportation Safety Board (NTSB), Boeing, and the FAA have all visited the crash site. Given that the aircraft is American-made, international protocols require joint investigation efforts. The cause of the crash remains under review.

CORE NUMBER

$21.88 billion

That’s India’s merchandise trade deficit for May 2025 — narrowing from $26.42 billion in April and slightly below the $22.09 billion gap a year ago, according to government data.

📉 Why it matters: The dip comes as India actively negotiates Free Trade Agreements and benefits from softer crude oil prices, which have weighed on import bills.

📦 What’s moving the numbers:

• Exports fell 2.17% YoY to $38.73 billion

• Imports dipped 1.7% to $60.61 billion

• Services trade surplus: $14.65 billion

• Electronics exports surged 54% in May

🤝 On the sidelines: India and the US are racing to seal an interim trade pact by July 9, even as tariffs remain under review.

Vehicle Demand Dips Slightly: Passenger vehicle (PV) dispatches fell 0.8% year-on-year to 344,656 units in May, per industry data, despite being the second-highest May tally ever. Two-wheelers rose 2.2%, while three-wheeler sales shrank 3.3%.

The Shift: Utility vehicles grew 7.6%, even as passenger car sales dropped 12.2%. Scooter sales rose 7.1%, while motorcycles were flat.

What’s Next? High dealer inventory, weak sentiment, and subdued demand in entry models remain challenges. However, the auto industry is hopeful, thanks to the 100 bps rate cut by the Reserve Bank of India, the central bank, and a forecast of strong monsoons. Both are expected to boost affordability and improve consumer sentiment.

Trump Could Expand Travel Ban. According to an internal state department cable, the Trump administration could expand their travel ban to 36 more countries, which include Bhutan, Kyrgyzstan, some Caribbean and several African countries. 

Context: Earlier this month, President Trump signed a travel ban that excluded people from 12 countries – including Iran, Afghanistan and Yemen – from entering the United States, on the grounds of protecting national security. 

Overview: As US President Trump promised during his campaign speeches, his administration has also been cracking down on undocumented immigrants. They’ve also deported several international students, including Indians, for criticising Israel, the US’s staunch ally. 

Rural India See Increased Unemployment. India’s unemployment rate rose from 5.1% in April 2025 to 5.6% in May 2025, largely because of a drop in rural employment, according to the Ministry of Statistics and Programme’s latest employment data. 

Context: The ministry said that this drop happens each year, at the end of the rabi season, when there’s a drop in farm-related employment. The ministry also said that we’re seeing a broader trend of rural employment moving toward secondary sectors like manufacturing as well as services over farming.

The Backstory: India remains deeply unequal in terms of the participation of women in the country’s labour force—only 35.2% of rural women reported working, versus an even lower figure of 23% for urban women. Even that figure dropped from last month, which MoSPI attributes to the higher summer temperatures and to more women performing domestic duties instead.

THE SIGNAL DAILY

Will Cinema Theatres Survive the Streaming Era?

India makes more movies than any other country in the world. A lot of us also grew up with a regular habit of going to the cinemas and catching the latest film.

But, COVID changed that. Cooped up in our homes, we got addicted to online streaming platforms, and didn’t change our habits even after the era of social distancing ended.

A 2024 report by media consultancy Ormax found that between 2020 to 2023, there was a 16% decline in how many people said they watched at least one movie at the cinemas that year. Even the Hindi film industry’s success metrics have changed. An Economic Times report said that before 2020, Bollywood saw a movie that earned 100 crores in the cinema as a box office success. But now, that benchmark has gone down to 50 crore rupees. 

In the latest episode of The Signal Daily, available Monday June 16 at 6 pm IST, we speak to Ishaa Soni, a film buff whose cinema habits have drastically changed since COVID. What will make her, and consumers like her, return to the cinema halls? 

The Core produces The Signal Daily. Find us wherever you get your favourite podcasts. To check out the rest of our work, go to www.thecore.in 

PODCAST

On Episode 608 of The Core Report, financial journalist Govindraj Ethiraj talks to Mahesh Balasubramaniam, Managing Director of Kotak Mahindra Life Insurance Company (Kotak Life). 

• Markets hold out against war fears

• Gold prices hit an all time high, cross Rs 100,000 

• Oil prices are in uncharted territory for now even as consolidation waves continue

• China is seeing another DeepSeek phenomenon, this time it is in biotech

• India’s life insurance business, riding on post Covid shifts, is pushing the digital frontiers though the majority is still physical

👥 THE TEAM

✍️ Zinal Dedhia, Salman SH, Kudrat Wadhwa | ✂️ Rohini Chatterji | 🎧 Joshua Thomas