Rare Earths, Real Trouble

DECODE THE NEWS

Rare Earth Metals Shortage To Hit India’s ‘Mission Critical Industries’ Beyond Auto

What?

China’s recent curbs on rare earth metals won’t just affect the automotive industry. Several other industries where India’s strategic ambitions lie, such as semiconductors, wind turbines and medical equipment industries, could be derailed.

“From electronics to semiconductors, the entire communications chain — like chips, satellites, telecom as well as defence sector manufacturing requires rare earth metals and compounds,” Rajib Maitra, partner at Deloitte India, told The Core.

A group of 17 metals — including 15 silvery-white metals of the Lanthanide series and two transition metals — known as rare metals, have a variety of uses.

These metals enable everything from MRI scanners and satellites to permanent magnets in wind turbines and chips.

The immediate concern is that India imports a majority of these materials, and refining capabilities are overwhelmingly China-dependent, which may undercut India’s push for self-reliance in key sectors.

The Crunch

Key sectors where India is either trying to build an export base, like semiconductors or wind turbines, will be affected, possibly derailing its sustainability and net-zero goals.

“The semiconductor sector is likely to be impacted by the restrictions. The India Semiconductor Mission (ISM) has an outlay of Rs 76,000 crore and is expected to cross $100 billion in size by 2030. These plans will see challenges in the shorter term due to any potential restrictions in rare earth supply,” said Maitra.

China’s restrictions, however, pertain to end-use more than blanket restrictions. As per reports, as many as 30 Indian companies import rare earths. While EVs and medical devices might find it easier to receive certificates of imports, a burgeoning indigenous defence industry, as well as export-focused semiconductors, might face hurdles.

What Next?

India’s industries minister Piyush Goyal recently termed the restrictions as a ‘global wake-up call’, adding that the country is actively building alternate supply chains.

Rare earth elements are actually a misnomer, as they are fairly abundant in availability.

India’s National Critical Mineral Mission aims to explore and auction 24 minerals, with 1,200 exploration projects in the pipeline. The country holds 8% of global rare earth reserves, fifth-largest globally.

Can India scale up its rare earth metal projects soon?

BUILD ON BLOCKCHAIN

Blockchain: The Ozempic For Business Bloat

What?

Blockchain is quietly revolutionising how businesses operate. Or can. Take, for example, the case of medical care. Imagine if instead of being scattered around different emails, you could access all your medical documents in one place.

No delay. No paperwork. Just correct, authentic data, available when you need it. Blockchain has the potential to do this.

How It Works

Blockchain acts like a tamper-proof digital notebook. Every entry — a payment, record, or contract — is time-stamped and shared among authorised parties, reducing errors and miscommunication.

Smart contracts can automate actions when certain conditions are met — like filing an insurance claim or processing vendor payments — cutting out middlemen and delays.

How can blockchain further modernise operations?

This series is brought to you in partnership with Algorand. 

CORE NUMBER

Rs 19,013 crore

That's how much Indian equity mutual funds received in net inflows in May, a 13-month low. The sharp 22% month-on-month drop marks the fifth consecutive month of declining inflows, according to the Association of Mutual Funds in India (AMFI).

➡️ The broader context:

• Large-cap funds: Inflows more than halved to Rs 1,250 crore.

• Mid- and small-cap funds: Inflows declined 15% and 20% respectively.

• Systematic Investment Plans (SIPs): Contributions rose to a record high of Rs 26,688 crore.

📉 What's driving the decline?

• A softer market in May following sharp rallies in previous months.

• Stretched valuations are making investors cautious.

• Global macro headwinds, including inflation concerns.

Starlink's India Hurdles: Elon Musk's Starlink has unveiled potential unlimited data plans starting at ₹3,000 in India, with a one-time receiver cost of Rs 33,000, per CNBC Awaaz. Launch was eyed within 12 months.

The Twist: Industry sources told The Core that a Starlink India debut within that timeframe is unlikely. "The Indian government has granted licenses to Starlink, Reliance Jio, and Bharti Airtel. However, spectrum allocation is still pending," a source stated.

Why It Matters: Delays stem from Starlink's need for spectrum and infrastructure. While Indian operators like Jio, Vodafone Idea, and Airtel have ground networks, "Starlink has not yet approached them," the source added, suggesting independent build-out. Eventually, Starlink could operate in three ways: direct-to-consumer, or via Airtel and Jio resellers. All models await government spectrum decisions.

Magnet Shortage Impacts: China’s export curbs on rare earth magnets have triggered a critical supply bottleneck for India’s auto sector. According to CRISIL, these magnets, essential for electric vehicle motors, are now subject to stringent export licenses, with clearances taking over 45 days — stalling imports and choking production lines.

By the Numbers
India imports over 80% of its rare earth magnets from China. Maruti Suzuki, the country’s largest carmaker, has slashed its e-Vitara EV production targets for April–September from 26,500 to 8,200 units—a two-thirds cut driven by magnet shortages.

What’s Next?
As approvals from China remain stalled, automakers are seeking alternate suppliers and building buffer inventories. Meanwhile, India is pushing local production and recycling to break dependency.

Public Banks Outpace Privates. For the first time in 14 years, public banks have surpassed their private counterparts in loan growth, according to an RBI study quoted by an Economic Times article.

By the Numbers: While PVBs recorded a y-o-y loan growth of 9%, that value stood at 13.1% for PSBs.

Why It Matters: Experts attribute this rise to the ability of PSBs to give loans at lower interest rates to more people, given their higher penetration in semi-urban and rural areas. As well, thanks to government-backed housing schemes, PSBs have been able to gain market share in home loans too.

Population Peak! India’s population is projected to hit 1.46 billion in 2025, remaining the largest globally. But the country’s fertility rate has dropped to 1.9 — below the replacement level — marking a major demographic transition.

By the Numbers: India’s working-age population is 68%, while 26% are aged 10–24. Life expectancy stands at 71 for men and 74 for women. Fertility has fallen from nearly six children per woman in 1960 to about two today.

What This Means: The UN urges focus on reproductive rights, not fertility panic, to unlock India's demographic dividend.

On Episode 603 of The Core Report, financial journalist Govindraj Ethiraj talks to G Chokkalingam, Founder at Equinomics Research & Advisory Pvt Ltd. We also feature an excerpt from our extended interview with Algorand’s Anil Kakani and Nikhil Varma in our ongoing “Build On Blockchain” Series. 

• Markets take a breather as bank stocks see selling

• Is it the macro story or micro story that is driving Indian stockmarkets right now

• How Wall Street banks are doubling down on Indian derivatives

• Rare earth crisis escalates for Indian companies, Maruti to slash production of some models

• Apple’s Liquid Glass fails to enthuse the market

• Build On Blockchain

👥 THE TEAM

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