After China’s shocking move, India joins hands with Japan for…, Mukesh Ambani plans to…

China has long dominated the supply chain for rare earth elements and is now using it as a strategic tool. Recently, it halted the supply of rare earth magnets to India which created a crisis for Indian auto industries.

The suspension of rare earth magnet supplies from China has given a huge challenge to India’s automotive and electronics industries. In response, India is exploring various alternatives like domestic production of rare earth magnets. Meanwhile, several Japanese companies are also exploring possibilities of collaborating with India to establish a rare earth supply chain.

India Japan Collaboration

According to a report by Mint, representatives from over a dozen of Japanese companies, including those in the EV battery and critical mineral supply chain sectors, are currently in India. Companies like Panasonic, Mitsubishi Chemicals, and Sumitomo Metals and Mining are part of this group. These companies, associated with Japan’s Battery Association of Supply Chain, are exploring partnership opportunities in India.

Indian Companies In Focus

The report suggests that Indian firms like Amara Raja and Reliance are in discussions with Japanese industries. These talks are focused on the supply chain for lithium-ion batteries, which are crucial for EVs and energy storage systems. Both Indian and Japanese companies want to challenge China’s dominance in the rare earth sector, where China controls 90% of the global supply of rare earth magnets. Since April, China has stopped supplying rare earth magnets to India. Additionally, China holds an 80% share in global lithium battery production and Japan is at second position but with only 10% share.

However, according to some experts, these partnerships with Japanese companies may have limited benefits for Indian firms, as China controls most of the value chain in rare earth elements like mining, refining, and processing. Currently, more than three-quarters of batteries used by Indian EV companies are imported from China, along with supplies from South Korea and Japan. Indian companies are actively working to reduce this dependency.

According to media reports, batteries produced by Indian companies may be 20–30% more expensive than their Chinese counterparts. This cost difference is there because Chinese companies do not rely on imports for raw materials. While Japanese companies can assist with battery materials and technology, their expertise is more centered around hybrid systems rather than complete EV solutions.

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