Fresh policy response must to cut China grip

China’s domination of global manufacturing has prompted the Economic Survey to suggest fresh policy responses, especially in case of electric vehicles, green energy and critical minerals, as it reminded that the dragon’s vice-like grip had caused major shocks to major industrialised nations.
“China’s rise in the global auto market has disrupted the long-term incumbents in economies like Germany and Japan, and it dominates the global distribution of critical minerals and other economic resources, creating potential dependencies for posterity,” it said.The document pointed out how Chinese companies were dominating the global supply chain, controlling over 80% of the production capacity in solar power equipment and being home to the world’s top 10 producers. Similarly, it controlled 80% of the battery manufacturing capacity, processed 70% of the rare minerals and was home to 60% of the wind energy capacity.
While govt has been promoting clean energy and green mobility through schemes such as PLI, the govt paper said that almost 75% of the lithium-ion batteries came from China, pointing to a need for diversifying the supply chain.
A similar recalibration on EVs was also suggested as these vehicles required six times more minerals than their conventional counterparts. And this is where China enters the frame, controlling the majority of the critical mineral production and processing, be it cobalt, nickel or lithium.
With two-thirds of the rare minerals mined by China and 90% processed by it, the mines ministry has concluded that 245 of the 33 critical minerals vital to India’s economic security faced high risk of supply disruptions.
“As demand for EVs is expected to grow, dependence on imported components such as DC motors, e-motor magnets, and other electrical parts will likely rise. Leading EV manufacturers have noted an increasing proportion of Chinese imports in their total material expenditures, reflecting a significant dependence on China for certain resources and technical knowhow,” the survey said.
So, what’s the solution? More partnerships with other countries, diversification of supply chain and focus on public transport, especially when Indians have poor access to these services.