China lifts curbs on fertilizers, rare earths & tunnel boring machines to India

In a significant breakthrough, China has conveyed that it has lifted curbs on export of fertilizers, rare earth magnets/minerals as well as tunnel boring machines to India – the three asks New Delhi had from Beijing when External Affairs Minister S Jaishankar met his counterpart Wang Yi last month.

ET has reliably gathered that Chinese foreign minister Wang Yi, who is in India on a two-day visit, assured Jaishankar on Monday that China had already started responding to Indian requests on these three items. In fact, the understanding on the Indian side is that shipments have already begun, those familiar with the details said.

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India had underlined its concerns strongly with China as sudden fertilizer curbs had directly impacted availability of Di-Ammonium Phosphate in the Rabi season. Similarly, it had put on hold shipments of tunnel boring machines headed for key infrastructure projects in India including those manufactured by foreign entities in their China-based units.

The auto and electronics industries had flagged off serious concerns on Chinese restrictions over rare earth magnets and minerals, leading to shortages that could have a debilitating impact on production. These decisions were driven by security logic due to growing tensions between both countries.

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However, Wang and Jaishankar met twice last month to iron out political differences following a successful troops disengagement process on the Line of Actual Control. Both sides agreed to gradually restore normalcy in ties starting with confidence building measures to now easing economic restrictions.

This deal carries a significant message as it comes at a time when the US has hardened its stance on India, with top US officials constantly berating New Delhi on its ties with Russia. The Trump Administration has imposed an additional national security tariff of 25 per cent over and above additional tariffs, taking the total to 50 per cent.

India has also taken note of the fact that while coming down hard on New Delhi, the Trump Administration has taken a more accommodating view on Beijing by extending the trade truce and delaying imposition of tariffs by another 90 days besides moving to lift curbs on export of high-end chips to China.